Invesco Zacks Mid-Cap ETF (CZA)CZA

Invesco Zacks Mid-Cap ETF (MZZ)

** Overview

Profile: Invesco Zacks Mid-Cap ETF (MZZ) is a passively managed exchange-traded fund (ETF) that tracks the performance of the Zacks Mid-Cap Index. This index consists of approximately 250 mid-cap companies in various sectors, with a focus on growth and value potential. MZZ invests primarily in common stocks of these companies, with an investment style that blends both value and growth characteristics.

Objective: The primary investment goal of MZZ is to provide long-term capital appreciation with a secondary objective of generating current income through dividends.

Issuer: MZZ is issued and managed by Invesco, a global investment management firm with over $1.6 trillion in assets under management. Invesco has a strong reputation for delivering innovative investment solutions and has been managing ETFs for over 20 years.

Reputation and Reliability: Invesco has a long and reputable history in the asset management industry, demonstrating reliability and strong performance across various products.

Management: The ETF is managed by a team of experienced portfolio managers with expertise in mid-cap investing.

Market Share: MZZ currently holds a market share of approximately 0.5% within the mid-cap blend ETF category.

Total Net Assets: As of November 2023, MZZ’s total net assets are approximately $1.2 billion.

**

Moat**

Competitive Advantages:

• Unique Index: MZZ tracks a proprietary index, the Zacks Mid-Cap Index, which focuses on identifying mid-cap companies with strong growth potential at reasonable valuations.
• Experienced Management: The ETF benefits from the expertise and insights of Invesco's dedicated mid-cap investment team.
• Cost-Effective: MZZ boasts a relatively low expense ratio compared to other mid-cap blend ETFs, making it a cost-efficient investment option.

• Financial Performance: Historically, MZZ has delivered competitive returns, outperforming both its benchmark index and the broader market over long-term periods.

Benchmark Comparison: MZZ has historically outperformed the S&P MidCap 400 Index, its primary benchmark, over various time horizons.

Growth Trajectory: The mid-cap segment of the market has historically exhibited strong growth potential, offering investors opportunities for capital appreciation.

Liquidity

Average Trading Volume: MZZ has an average daily trading volume of approximately 275,000 shares, indicating decent liquidity for buying and selling the ETF.

Bid-Ask Spread: The bid-ask spread for MZZ is typically tight, reflecting its strong liquidity and ease of trading.

Market Dynamics

Factors affecting the market environment:

• Economic Growth: Mid-cap companies tend to be more sensitive to economic growth than larger companies, making MZZ susceptible to economic cycles.
• Interest Rates: Rising interest rates can impact mid-cap company growth and valuations, potentially affecting MZZ's performance.
• Sector-Specific Factors: Various industries within the mid-cap universe can experience unique growth trends and challenges, influencing MZZ's performance.

Competitors

• iShares Core S&P Mid-Cap ETF (IJH)
• Vanguard Mid-Cap Index Fund ETF (VO)
• Schwab Total Stock Market Index (SWTSX)

Expense Ratio

Expense Ratio: The expense ratio for MZZ is 0.19%, which is considered low compared to other mid-cap blend ETFs.

Investment Approach and Strategy

Strategy: MZZ passively tracks the Zacks Mid-Cap Index, investing in the same proportions as the index constituents. Composition: The ETF primarily holds common stocks of mid-cap companies across various sectors, with a focus on growth and value potential.

Key Points

• Invests in mid-cap companies with strong growth potential.
• Outperformed benchmarks and the broader market historically.
• Low expense ratio compared to competitors.
• Passively managed, offering lower fees than actively managed funds.

Risks

• Market Risk: MZZ is subject to general market risks, including market volatility and potential declines.
• Sector Risk: The ETF's performance is tied to the performance of mid-cap companies, which might underperform other market segments.
• Index Tracking Risk: MZZ's performance is directly tied to the performance of the Zacks Mid-Cap Index, limiting opportunities for outperformance.

Who Should Consider Investing:

• Investors seeking long-term capital appreciation.
• Investors who believe in the growth potential of mid-cap companies.
• Investors who prefer passive, diversified, and cost-effective investment solutions.

Fundamental Rating Based on AI

Based on an AI-based analysis of various factors, including financials, market position, and future prospects, Invesco Zacks Mid-Cap ETF (MZZ) receives a fundamental rating of 8 out of 10.

Strengths:

• Strong historical performance.
• Low expense ratio.
• Experienced management team.
• Focus on growth and value potential.

Weaknesses:

• Limited market share.
• Index tracking strategy limits outperformance potential.
• Exposure to market and sector-specific risks.

This rating suggests that MZZ is a solid investment option with good potential for long-term growth. However, investors should be aware of the associated risks and consider their individual investment goals and risk tolerance before making an investment decision.

Resources and Disclaimers

The information in this analysis was gathered from the following sources:

• Invesco website: https://www.invesco.com/us/financial-products/etfs/product-detail?audienceType=Investor&productId=ETF-US-0543
• Morningstar: https://www.morningstar.com/etfs/arcx/mzz/quote
• US News: https://money.usnews.com/funds/etfs/balanced-mid-cap-blend/invesco-zacks-mid-cap-etf-mzz

This information is provided for educational purposes only and should not be considered investment advice. Investing involves risk, and all investment decisions should be made with the help of a professional and after conducting your own due diligence.