Should Invesco S&P MidCap Momentum ETF (XMMO) Be on Your Investing Radar?

The Invesco S&P MidCap Momentum ETF (XMMO) was launched on March 3, 2005, and is a passively managed exchange traded fund designed to offer broad exposure to the Mid Cap Growth segment of the US equity market.

The fund is sponsored by Invesco. It has amassed assets over $7.36 billion, making it one of the larger ETFs attempting to match the Mid Cap Growth segment of the US equity market.

Why Mid Cap Growth

With market capitalization between $2 billion and $10 billion, mid cap companies usually contain higher growth prospects than large cap companies, and are considered less risky than their small cap counterparts. Thus, companies that fall under this category provide a stable and growth-heavy investment.

Qualities of growth stocks include faster growth rates compared to the broader market, as well as higher valuations and higher than average sales and earnings growth rates. Something to keep in mind is the higher level of volatility that is affiliated with growth stocks. Compared to value stocks, growth stocks are a safer bet in a strong bull market, but don't perform as strongly in almost all other financial environments.

Costs

Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.

Annual operating expenses for this ETF are 0.35%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 0.62%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Industrials sector -- about 42% of the portfolio. Information Technology and Materials round out the top three.

Looking at individual holdings, Curtiss-Wright Corp (CW) accounts for about 4.22% of total assets, followed by Technipfmc Plc (FTI) and Ati Inc (ATI).

The top 10 holdings account for about 27.05% of total assets under management.

Performance and Risk

XMMO seeks to match the performance of the S&P MIDCAP 400 MOMENTUM INDEX before fees and expenses. The S&P Midcap 400 Momentum Index is composed of securities with strong growth characteristics selected from the Russell Midcap Index.

The ETF has gained about 12.72% so far this year and was up about 19.54% in the last one year (as of 08/26/2026). In the past 52-week period, it has traded between $129.80 and $173.82.

The ETF has a beta of 1.09 and standard deviation of 21.15% for the trailing three-year period. With about 78 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco S&P MidCap Momentum ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, XMMO is a good option for those seeking exposure to the Style Box - Mid Cap Growth area of the market. Investors might also want to consider some other ETF options in the space.

The Vanguard Morningstar Mid-Cap Growth ETF (VOT) and the iShares Russell Mid-Cap Growth ETF (IWP) track a similar index. While Vanguard Morningstar Mid-Cap Growth ETF has $19.61 billion in assets, iShares Russell Mid-Cap Growth ETF has $20.33 billion. VOT has an expense ratio of 0.05% and IWP charges 0.23%.

Bottom-Line

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

To 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.

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This article originally published on Zacks Investment Research (zacks.com).

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