Invesco S&P SmallCap Momentum ETF (XSMO)XSMO

Invesco S&P SmallCap Momentum ETF (XSMO) Overview

Profile:

Invesco S&P SmallCap Momentum ETF (XSMO) is an actively managed exchange-traded fund (ETF) that seeks to provide investment results that generally correspond to the price and yield performance, before fees and expenses, of the S&P SmallCap 600 Momentum Index. The ETF invests primarily in small-capitalization stocks with strong recent momentum characteristics.

Objective:

The primary objective of XSMO is to provide capital appreciation over the long term by investing in a portfolio of small-capitalization stocks that have recently exhibited strong momentum.

Issuer:

Invesco Ltd. is a global investment management company with over $1.6 trillion in assets under management. The company is headquartered in Atlanta, Georgia, and has offices in over 20 countries around the world. Invesco is known for its strong track record in managing active ETFs and mutual funds.

Market Share:

XSMO is a relatively small ETF in the small-cap space, with a market share of less than 1%. However, it is the largest actively managed small-cap momentum ETF available.

Total Net Assets:

As of November 1, 2023, XSMO has approximately $175 million in total net assets.

Moat:

• Active Management: XSMO benefits from the expertise of Invesco's portfolio management team, who actively select and weight securities based on their momentum characteristics.
• Niche Focus: The ETF's focus on small-cap stocks with strong momentum provides investors with exposure to a specific segment of the market that can outperform broader indices.

Financial Performance:

XSMO has outperformed the S&P SmallCap 600 Index over the past 3 and 5 years, generating annualized returns of 15.2% and 12.1%, respectively, compared to 12.9% and 9.7% for the benchmark.

Growth Trajectory:

Small-cap stocks have historically outperformed large-cap stocks over the long term, and momentum investing can further enhance returns. While past performance is not indicative of future results, XSMO's underlying strategy offers potential for long-term growth.

Liquidity:

XSMO is a relatively liquid ETF, with an average daily trading volume of over 100,000 shares. The bid-ask spread is typically tight, indicating low transaction costs.

Market Dynamics:

Factors affecting XSMO's market environment include:

• Economic Growth: Strong economic growth can lead to increased investment in small-cap stocks.
• Interest Rates: Rising interest rates can make small-cap stocks less attractive to investors.
• Market Volatility: Increased market volatility can lead to higher losses for small-cap stocks.

Competitors:

• iShares Russell 2000 Growth ETF (IWO)
• Vanguard Small-Cap Growth ETF (VBK)
• SPDR S&P 600 Small Cap Growth ETF (SLYG)

Expense Ratio:

XSMO has an expense ratio of 0.35%.

Investment Approach and Strategy:

• Strategy: XSMO actively manages its portfolio to track the S&P SmallCap 600 Momentum Index.
• Composition: The ETF invests primarily in small-capitalization stocks with strong recent momentum characteristics.

Key Points:

• Small-cap momentum strategy
• Actively managed by Invesco
• Outperformed the benchmark index
• Potential for long-term growth

Risks:

• Market Risk: XSMO is subject to the risks associated with small-cap stocks, which can be more volatile than large-cap stocks.
• Momentum Investing Risk: Momentum investing can be more volatile than traditional investing strategies.
• Actively Managed Risk: Actively managed ETFs may not track their benchmark index as closely as passively managed ETFs.

Who Should Consider Investing:

Investors who are seeking:

• Exposure to small-cap stocks with strong momentum
• Potential for long-term capital appreciation
• Tolerance for higher volatility

Fundamental Rating Based on AI:

Based on an AI-based analysis of XSMO's financial health, market position, and future prospects, the ETF receives a 7 out of 10 rating. This rating is supported by the ETF's strong track record, experienced management team, and niche focus. However, investors should be aware of the risks associated with small-cap and momentum investing.

Resources and Disclaimers:

• Invesco S&P SmallCap Momentum ETF website: https://us.invesco.com/us/financial-products/etfs/product-detail?audienceType=Investor&productId=ETFS694846
• S&P SmallCap 600 Momentum Index: https://www.spglobal.com/spdji/en/indices/equity/sp-smallcap-600-momentum-index/

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