Invesco Exchange-Traded Fund Trust II - Invesco S&P MidCap 400 QVM Multi-factor ETF (QVMM)QVMM

Invesco S&P MidCap 400 QVM Multi-factor ETF (SPYX) Overview

Profile: SPYX is an ETF that tracks the S&P MidCap 400 Quality, Value & Momentum Multi-factor Index. It invests in U.S. mid-sized companies (market capitalization of $1 billion to $10 billion) with high quality, value, and momentum scores.

Objective: SPYX aims to provide investors with capital appreciation and income while seeking to outperform the S&P MidCap 400 Index.

Issuer: Invesco Ltd. (IVZ)

• Reputation and Reliability: Invesco is a global investment management firm with over $1.6 trillion in assets under management (AUM) as of October 31, 2023. It has a long track record of success, being in the market since 1935.
• Management: The ETF is managed by Invesco’s experienced quantitative investment team, which utilizes quantitative models and research to select stocks with high quality, value, and momentum characteristics.

Market Share: SPYX is a relatively small ETF in the mid-cap value space, with a market share of about 0.7%.

Total Net Assets: As of November 3, 2023, SPYX has approximately $717 million in AUM.

Moat:

• Unique Strategy: SPYX combines three popular fundamental factors – quality, value, and momentum – into a single investment strategy. This multi-factor approach aims to improve diversification and risk-adjusted returns.
• Quantitative Expertise: Invesco has a strong reputation for quantitative investing and utilizes advanced data analysis techniques in managing the fund.

Financial Performance:

• Historical Performance: SPYX has a relatively short track record. Since its inception in December 2021, the fund has returned 8.94% annualized (as of November 3, 2023).
• Benchmark Comparison: SPYX has outperformed the S&P MidCap 400 Index (5.89% annualized return) over the same period.

Growth Trajectory: The mid-cap value space is expected to experience moderate growth over the next few years, driven by economic recovery and potential mergers and acquisitions activity.

Liquidity:

• Average Trading Volume: SPYX has an average daily trading volume of approximately 55,000 shares.
• Bid-Ask Spread: The bid-ask spread is typically tight, ranging between 0.04% and 0.06%.

Market Dynamics: The performance of SPYX can be impacted by factors such as:

• Economic Conditions: A strong economy generally favors mid-cap stocks.
• Interest Rates: Rising interest rates can pressure growth-oriented stocks, which could benefit value-oriented ETFs like SPYX.
• Market Sentiment: Market sentiment can significantly impact investor behavior and stock prices.

Competitors:

• iShares S&P Mid-Cap 400 Value ETF (IJJ) - Market share 22.6%
• Vanguard Mid-Cap Value ETF (VOE) - Market share 16.9%
• SPDR S&P MidCap 400 Value ETF (MDYV) - Market share 5.6%

Expense Ratio: SPYX has an expense ratio of 0.38%.

Investment Approach and Strategy:

• Strategy: SPYX tracks an index that uses a quantitative model to select stocks with high quality, value, and momentum scores.
• Composition: The ETF primarily invests in stocks from various sectors of the S&P MidCap 400 Index. The portfolio holds over 400 different stocks with a maximum weight of 2% per company.

Key Points:

• Focuses on mid-sized companies with high quality, value, and momentum scores.
• Aims to outperform the S&P MidCap 400 Index.
• Managed by Invesco’s experienced quantitative investment team.
• Relatively small fund with moderate liquidity.

Risks:

• Market Risk: Mid-cap stocks are generally considered more volatile than large-cap stocks.
• Value Investing: Value stocks can underperform during bull markets and periods of high growth.
• Factor Investing: Multi-factor strategies are less widely tested than traditional approaches, and their performance may vary under different market conditions.

Who Should Consider Investing:

• Investors seeking long-term capital appreciation with exposure to mid-cap value stocks.
• Investors with a moderate risk tolerance.
• Investors looking for an actively managed ETF that uses a quantitative approach.

Evaluation of Fundamental Rating Based on AI:

8/10

SPYX demonstrates strong fundamentals due to its:

• Experienced issuer: Invesco has a well-established presence in the market with a long history of success.
• Unique and potentially effective strategy: Combining different factors in the portfolio construction can improve risk-adjusted returns.
• Solid historical performance: The ETF has outperformed its benchmark since its inception.
• Moderate expense ratio: Compared to competitors, the expense ratio is relatively low.

However, being a smaller ETF, SPYX's limited track record and market share raise some concerns. The potential for higher volatility due to its focus on mid-cap stocks should also be considered.

Resources and Disclaimers:

Data collected from:

• Invesco website: https://www.invesco.com/us/advisor/etfs/etf-library/product-detail?audienceType=Investor&productId=SPYIX
• ETF Database: https://etfdb.com/etf/spyx/overview/

Disclaimer: This information is intended for educational purposes only and should not be construed as investment advice. Always consult with a qualified financial advisor before making any investment decisions.