Invesco Exchange-Traded Fund Trust II - Invesco S&P SmallCap 600 QVM Multi-factor ETF (QVMS)

ETF Invesco Exchange-Traded Fund Trust II - Invesco S&P SmallCap 600 QVM Multi-factor ETF

Profile:

Overview: The Invesco S&P SmallCap 600 QVM Multi-factor ETF (XSVM) is an actively managed exchange-traded fund (ETF) that seeks to track the performance of the S&P SmallCap 600 Quality, Value, Momentum Multi-Factor Index. This index uses a quantitative multi-factor approach to select stocks from the S&P SmallCap 600 Index based on factors like quality, value, and momentum.

Target sector: Small-cap stocks

Asset allocation: 100% equities

Investment strategy: Active management, quantitative multi-factor approach

Objective:

The primary investment goal of XSVM is to outperform the S&P SmallCap 600 Index by investing in a diversified portfolio of small-cap stocks that exhibit favorable quality, value, and momentum characteristics.

Issuer:

Name: Invesco Exchange-Traded Fund Trust II

Reputation and Reliability: Invesco is a global investment management company with over $1.6 trillion in assets under management. They are known for their expertise in various asset classes and investment strategies.

Management: The ETF is managed by a team of experienced portfolio managers with expertise in quantitative strategies and factor investing.

Market Share:

XSVM has a market share of approximately 0.2% in the small-cap multi-factor ETF space.

Total Net Assets:

The ETF has approximately $350 million in assets under management.

Moat:

The ETF's competitive advantage lies in its unique multi-factor approach. By combining factors like quality, value, and momentum, XSVM aims to achieve superior risk-adjusted returns compared to traditional market-cap weighted small-cap ETFs.

Financial Performance:

The ETF has a relatively short track record, launched in September 2022. Since inception, it has delivered a total return of 1.5% compared to the S&P SmallCap 600 Index's return of 0.8%.

Growth Trajectory:

Given its recent launch, assessing the ETF's long-term growth trajectory is challenging. However, the increasing popularity of factor investing and the potential for outperformance compared to traditional market-cap weighted strategies suggest promising growth potential.

Liquidity:

Average Trading Volume: The ETF has an average daily trading volume of approximately 25,000 shares.

Bid-Ask Spread: The average bid-ask spread is around 0.05%.

Market Dynamics:

Factors affecting the ETF's market environment include:

• Overall market conditions and investor sentiment
• Performance of the small-cap stock market
• Interest rates and economic growth
• Popularity of factor investing strategies

Competitors:

• iShares S&P Small-Cap 600 Value ETF (IJS) - Market share: 15%
• Vanguard Small-Cap Value ETF (VBR) - Market share: 10%
• Schwab Small-Cap Value ETF (SCHA) - Market share: 5%

Expense Ratio:

The ETF has an expense ratio of 0.35%.

Investment approach and strategy:

Strategy: XSVM aims to actively track the S&P SmallCap 600 Quality, Value, Momentum Multi-Factor Index.

Composition: The ETF primarily invests in US small-cap stocks selected based on a multi-factor quantitative model.

Key Points:

• Seeks to outperform the S&P SmallCap 600 Index through a multi-factor approach.
• Actively managed by a team of experienced portfolio managers.
• Relatively low expense ratio.
• Suitable for investors seeking exposure to small-cap stocks with favorable quality, value, and momentum characteristics.

Risks:

• Small-cap stocks are inherently more volatile than large-cap stocks.
• The ETF's performance depends on the effectiveness of its multi-factor model.
• The ETF is actively managed, which means there is a risk of tracking error.

Who Should Consider Investing:

• Investors seeking exposure to small-cap stocks.
• Investors who believe in the potential of factor investing strategies.
• Investors with a long-term investment horizon.

Fundamental Rating Based on AI (1-10)

Rating: 8/10

Justification:

XSVM scores highly on several key fundamental factors:

• Experienced issuer with a strong reputation.
• Unique and potentially effective multi-factor approach.
• Reasonable expense ratio.
• Potential for outperformance compared to traditional market-cap weighted strategies.

However, the ETF's short track record and relatively small market share present some uncertainty. Overall, XSVM appears to be a well-structured ETF with a promising investment proposition for investors seeking exposure to small-cap stocks with enhanced risk-adjusted returns.

Resources and Disclaimers:

• Invesco S&P SmallCap 600 QVM Multi-factor ETF: https://us.invesco.com/content/dam/us/siteassets/documents/us-etfs/us-etf-sp-smcap-600-fact-sheet.pdf
• S&P SmallCap 600 Quality, Value, Momentum Multi-Factor Index: https://www.spglobal.com/spdji/en/indices/equity/sp-smallcap-600-quality-value-momentum-multi-factor-index/

Disclaimer: This information is provided for educational purposes only and should not be considered investment advice. Please consult with a qualified financial advisor before making any investment decisions.