The Quality Screened Mid Cap XMHQ ETF Rocketed 283% And Made Money The Easy Way

"Mid-cap stocks occupy an unusual position in portfolio construction. Too large for the explosive early-stage growth of small caps, too small for the stability and analyst coverage of mega-caps, they're often overlooked despite historically delivering stronger long-term returns than both. Invesco S&P MidCap Quality ETF ( NYSEARCA:XMHQ) attempts to refine this space further by filtering for quality-companies with strong balance sheets, profitability, and return on equity-but does that screening actually deliver better results for investors?"

"XMHQ is designed for investors who want mid-cap exposure without the volatility and operational risk that often accompanies smaller companies. The fund tracks the S&P MidCap 400 Quality Index, selecting companies based on three quality metrics: return on equity, accruals ratio, and financial leverage. This screening process narrows the universe to 100 holdings that have demonstrated consistent profitability and financial discipline."

"The portfolio reflects where quality companies cluster in today's market. Industrials (23.8%) and Healthcare (21.3%) dominate-both sectors where established mid-caps can generate steady cash flows and maintain competitive advantages. The fund charges a competitive 0.25% expense ratio for this factor-based approach, though the modest 0.46% dividend yield signals these companies prioritize reinvestment over immediate income. The top position, Illumina ( NASDAQ:ILMN) at 4.02%, demonstrates active stock selection rather than market-cap weighting."

XMHQ provides targeted mid-cap exposure by tracking the S&P MidCap 400 Quality Index and selecting 100 companies based on return on equity, accruals ratio, and financial leverage. The fund emphasizes Industrials (23.8%) and Healthcare (21.3%), where mid-caps can produce steady cash flows and competitive advantages. XMHQ charges a 0.25% expense ratio and yields 0.46%, indicating profit reinvestment over income distribution. The largest holding is Illumina at 4.02%, reflecting active, quality-first stock selection rather than strict market-cap weighting. The strategy aims to compound earnings more consistently and offer downside protection through quality screens.

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