Quality ETFs have seen widespread investor interest this year, with Invesco’s lineup getting considerable attention.
The popular Invesco S&P 500 Quality ETF (SPHQ ) has seen strong inflows in 2024, accreting $3 billion in net flows year to date through November 12.
While SPHQ is a great way to enhance portfolios, investors should not forget about the quality ETFs available down the cap spectrum. Advisors tend to consider large caps when they think of high-quality stocks. However, focusing on companies with strong balance sheets and other favorable fundamental attributes is also advantageous in mid- and small-caps. A quality tilt may reduce risks in investing in smaller companies
For quality exposure to mid and small-cap companies, investors can look to Invesco S&P MidCap Quality ETF (XMHQ ) and the Invesco S&P SmallCap Quality ETF (XSHQ ).
Comparing Invesco’s Quality ETFs
SPHQ comprises 100 companies from the S&P 500 that have impressive quality scores. These scores are calculated based on three fundamental measures: return on equity, accruals ratio, and financial leverage ratio.
XMHQ offers quality mid-cap exposure and has been very popular in 2024. The fund has garnered $2.9 billion in net flows year to date through November 12.
XMHQ’s underlying index includes the 80 securities in the S&P Midcap 400 Index that exhibit the highest quality scores. The quality scores are calculated based on three fundamental measures. These include return on equity, accruals ratio, and financial leverage ratio.
The mid-cap ETF has grown significantly in recent years. XMHQ has $6.1 billion in assets under management.
Finally, XSHQ offers small-cap exposure and has garnered $221 million in net flows year to date through November 12, an impressive feat for the fund that has $374 million in assets under management.
The small-cap quality ETF is made up of 120 securities in the S&P SmallCap 600 Index that have the highest quality scores. Like XMHQ, the quality scores are calculated based on return on equity, accruals ratio, as well as financial leverage ratio.
XMHQ charges 25 basis points while XSHQ charges 29 basis points.
For more news, information, and analysis, visit the Innovative ETFs Channel.
