Is Invesco S&P SmallCap Quality ETF (XSHQ) a Strong ETF Right Now?

Making its debut on 04/06/2017, smart beta exchange traded fund Invesco S&P SmallCap Quality ETF (XSHQ) provides investors broad exposure to the Style Box - Small Cap Blend category of the market.What Are Smart Beta ETFs?Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.Fund Sponsor & IndexManaged by Invesco, XSHQ has amassed assets over $407.34 million, making it one of the average sized ETFs in the Style Box - Small Cap Blend. XSHQ seeks to match the performance of the SmallCap 600 Quality Index before fees and expenses.The S&P SmallCap 600 Quality Index is composed of 120 securities in the S&P SmallCap 600 Index that have the highest quality score, which is calculated based on the average of three fundamental measures: return on equity, accruals ratio and financial leverage ratio.Cost & Other ExpensesWhen considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.Operating expenses on an annual basis are 0.29% for XSHQ, making it on par with most peer products in the space.The fund has a 12-month trailing dividend yield of 1.04%.Sector Exposure and Top HoldingsETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.XSHQ's heaviest allocation is in the Financials sector, which is about 27% of the portfolio. Its Industrials and Consumer Discretionary round out the top three.Taking into account individual holdings, Mueller Industries Inc (MLI) accounts for about 4.14% of the fund's total assets, followed by Jackson Financial Inc (JXN) and Armstrong World Industries Inc (AWI).XSHQ's top 10 holdings account for about 23.59% of its total assets under management.Performance and RiskSo far this year, XSHQ has added about 17%, and was up about 26.20% in the last one year (as of 12/06/2024). During this past 52-week period, the fund has traded between $37.15 and $47.59.XSHQ has a beta of 0.98 and standard deviation of 21.65% for the trailing three-year period. With about 117 holdings, it effectively diversifies company-specific risk.AlternativesInvesco S&P SmallCap Quality ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.IShares Russell 2000 ETF (IWM) tracks Russell 2000 Index and the iShares Core S&P Small-Cap ETF (IJR) tracks S&P SmallCap 600 Index. IShares Russell 2000 ETF has $81.89 billion in assets, iShares Core S&P Small-Cap ETF has $93.89 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Small Cap Blend.Bottom LineTo 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.Want key ETF info delivered straight to your inbox?Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Invesco S&P SmallCap Quality ETF (XSHQ): ETF Research Reports Armstrong World Industries, Inc. (AWI): Free Stock Analysis Report Mueller Industries, Inc. (MLI): Free Stock Analysis Report iShares Russell 2000 ETF (IWM): ETF Research Reports iShares Core S&P Small-Cap ETF (IJR): ETF Research Reports Jackson Financial Inc. (JXN): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks