Designed to provide broad exposure to the Mid Cap Value segment of the US equity market, the Invesco S&P MidCap Value with Momentum ETF (XMVM) is a passively managed exchange traded fund launched on 03/03/2005.
The fund is sponsored by Invesco. It has amassed assets over $211.46 million, making it one of the smaller ETFs attempting to match the Mid Cap Value segment of the US equity market.
Why Mid Cap Value
Mid cap companies, with market capitalization in the range of $2 billion and $10 billion, offer investors many things that small and large companies don’t, including less risk and higher growth opportunities. Thus, companies that fall under this category provide a stable and growth-heavy investment.
Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. Considering long-term performance, value stocks have outperformed growth stocks in almost all markets; however, they are more likely to underperform growth stocks in strong bull markets.
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.39%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.08%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund’s holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Financials sector–about 30.40% of the portfolio. Consumer Discretionary and Industrials round out the top three.
Looking at individual holdings, Jefferies Financial Group Inc (JEF) accounts for about 2.86% of total assets, followed by Autonation Inc (AN) and Builders Firstsource Inc (BLDR).
The top 10 holdings account for about 21.79% of total assets under management.
Performance and Risk
XMVM seeks to match the performance of the S&P MIDCAP 400 HIGH MOMENTUM VALUE INDEX before fees and expenses. The S&P MidCap 400 High Momentum Value Index is composed of securities with strong value characteristics selected from the Russell Midcap Index.
The ETF has gained about 1.69% so far this year and it’s up approximately 41.14% in the last one year (as of 01/05/2022). In the past 52-week period, it has traded between $37.36 and $49.99.
The ETF has a beta of 1.15 and standard deviation of 30.22% for the trailing three-year period. With about 81 holdings, it effectively diversifies company-specific risk.
Invesco S&P MidCap Value with Momentum ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, XMVM is a great option for investors seeking exposure to the Style Box – Mid Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares Russell MidCap Value ETF (IWS) and the Vanguard MidCap Value ETF (VOE) track a similar index. While iShares Russell MidCap Value ETF has $15.57 billion in assets, Vanguard MidCap Value ETF has $16.04 billion. IWS has an expense ratio of 0.23% and VOE charges 0.07%.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Invesco S&P MidCap Value with Momentum ETF (XMVM): ETF Research Reports
AutoNation, Inc. (AN) : Free Stock Analysis Report
Jefferies Financial Group Inc. (JEF) : Free Stock Analysis Report
Builders FirstSource, Inc. (BLDR) : Free Stock Analysis Report
Vanguard MidCap Value ETF (VOE): ETF Research Reports
iShares Russell MidCap Value ETF (IWS): ETF Research Reports
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