Is Invesco S&P SmallCap Quality ETF (XSHQ) a Strong ETF Right Now?

The Invesco S&P SmallCap Quality ETF (XSHQ) made its debut on 04/06/2017, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Small Cap Blend category of the market.What Are Smart Beta ETFs?Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.Fund Sponsor & IndexThe fund is managed by Invesco. XSHQ has been able to amass assets over $272.2 million, making it one of the average sized ETFs in the Style Box - Small Cap Blend. XSHQ, before fees and expenses, seeks to match the performance of the SmallCap 600 Quality Index.The S&P SmallCap 600 Quality Index is composed of 120 securities in the S&P SmallCap 600 Index that have the highest quality score, which is calculated based on the average of three fundamental measures: return on equity, accruals ratio and financial leverage ratio.Cost & Other ExpensesFor ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.Operating expenses on an annual basis are 0.29% for this ETF, which makes it on par with most peer products in the space.XSHQ's 12-month trailing dividend yield is 1.24%.Sector Exposure and Top HoldingsIt is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.XSHQ's heaviest allocation is in the Industrials sector, which is about 25.4% of the portfolio. Its Financials and Consumer Discretionary round out the top three.Looking at individual holdings, Sterling Infrastructure Inc (STRL) accounts for about 2.84% of total assets, followed by Armstrong World Industries Inc (AWI) and Interdigital Inc (IDCC).The top 10 holdings account for about 21.34% of total assets under management.Performance and RiskThe ETF has lost about -1.98% so far this year and is down about -2.41% in the last one year (as of 10/13/2025). In the past 52-week period, it has traded between $34.34 and $47.59XSHQ has a beta of 0.99 and standard deviation of 20.92% for the trailing three-year period. With about 122 holdings, it effectively diversifies company-specific risk .AlternativesInvesco S&P SmallCap Quality ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.iShares Russell 2000 ETF (IWM) tracks Russell 2000 Index and the iShares Core S&P Small-Cap ETF (IJR) tracks S&P SmallCap 600 Index. iShares Russell 2000 ETF has $66.96 billion in assets, iShares Core S&P Small-Cap ETF has $82.96 billion. IWM has an expense ratio of 0.19% and IJR changes 0.06%.Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Small Cap BlendBottom LineTo learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.Boost Your Portfolio with Our Top ETF InsightsZacks' exclusive Fund Newsletter delivers actionable information, top news and analysis, as well as top-performing ETFs, straight to your inbox every week.Don’t miss out on this valuable resource. It’s free!Get it now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Invesco S&P SmallCap Quality ETF (XSHQ): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks