XMHQ vs XMMO

Key Takeaways

• XMHQ and XMMO both draw from the S&P MidCap 400 universe, but they apply fundamentally different filters: XMHQ screens for "quality" while XMMO targets "momentum."
• XMHQ offers more balanced sector exposure (led by Industrials, Information Technology, Healthcare, and Financials), while XMMO is heavily concentrated in Industrials at roughly 43% of assets.
• XMHQ is the cheaper fund with a 0.25% net expense ratio, versus 0.34%–0.35% for XMMO, giving the quality fund a cost advantage.
• XMMO has historically carried higher volatility and a higher beta relative to the broader market, reflecting its trend-following tilt.
• Tickeron AI Verdict: XMHQ is the preferred choice based on cost efficiency, diversification, and lower risk exposure.

Introduction

Both XMHQ and XMMO are mid-cap exchange-traded funds (ETFs) managed by Invesco and built from the same S&P MidCap 400 index. Yet they do not compete directly in the strictest sense; rather, they represent alternative factor tilts aimed at similar investor goals — capturing U.S. mid-cap equity returns with a rules-based screen. XMHQ selects companies with strong quality characteristics, while XMMO favors stocks exhibiting persistent price momentum. For investors deciding between value-style quality and trend-following momentum, this ETF comparison clarifies the structural differences, sector exposure, and relative positioning of each fund in the current market environment.

Invesco S&P MidCap Quality ETF (XMHQ) Overview

XMHQ is a passively managed fund that seeks to track the S&P MidCap 400 Quality Index. The index selects a subset of S&P MidCap 400 constituents deemed to exhibit "high quality," typically measured through metrics such as return on equity, earnings stability, and balance-sheet strength. The fund was launched in December 2006 and holds approximately 80 to 82 securities, providing meaningful diversification across company-specific risk.

Top holdings include FTI (TechnipFMC), ILMN (Illumina), MEDP (Medpace), NVT (nVent Electric), MANH (Manhattan Associates), EXEL (Exelixis), and UTHR (United Therapeutics). Sector allocation is comparatively broad, led by Industrials (roughly 29%), followed by Information Technology and Healthcare (about 17% each), Financials (around 16%), and Consumer Cyclical (near 9–10%). The fund carries a net expense ratio of 0.25%, among the lowest in its mid-cap category, and rebalances according to the index provider's scheduled quality-screen methodology.

Invesco S&P MidCap Momentum ETF (XMMO) Overview

XMMO is also a passively managed fund, tracking the S&P MidCap 400 Momentum Index. That index holds the securities within the S&P MidCap 400 with the highest momentum scores, based on recent price performance and trend persistence. Launched in March 2005, XMMO maintains roughly 77 to 81 holdings, but its weighting scheme skews heavily toward stocks demonstrating strong upward trends.

Top holdings include CW (Curtiss-Wright), ATI (ATI Inc.), FTI (TechnipFMC), NVT (nVent Electric), WWD (Woodward), RGLD (Royal Gold), and MKSI (MKS Instruments). Sector exposure is far more concentrated than XMHQ: Industrials dominate at about 43% of the portfolio, with Information Technology (around 12–13%), Energy (about 8%), and Healthcare (about 8%) trailing well behind. The fund's net expense ratio is 0.34%–0.35%, higher than XMHQ's, reflecting the more dynamic nature of momentum rebalancing.

Industry and Thematic Backdrop

Both funds are heavily exposed to the industrial sector and the broader mid-cap economic cycle, making them sensitive to manufacturing activity, capital expenditure trends, and reshoring dynamics. In recent market cycles, mid-cap industrials and defense-adjacent names have benefited from infrastructure investment and supply-chain reconfiguration, which has supported several shared top holdings such as Curtiss-Wright, nVent Electric, and TechnipFMC. Interest-rate expectations also matter: quality-focused funds tend to weather tighter financial conditions better, while momentum strategies can amplify swings during rapid sector rotation. Energy, healthcare, and technology represent secondary but meaningful drivers for both ETFs, and any shift in those sectors' earnings momentum can materially affect relative positioning.

Performance and Positioning Comparison

Over recent weeks and months, XMMO's momentum tilt has historically translated into stronger upside during trending markets but deeper drawdowns when sentiment reverses. Its higher beta and annualized volatility relative to the broader market reflect this behavior. XMHQ, by contrast, has generally exhibited lower volatility and a more defensive profile, with returns driven by consistent fundamental quality rather than price momentum. The two funds share several top holdings, so their performance can diverge primarily through sector concentration and weighting differences — XMMO's outsized Industrials stake versus XMHQ's more balanced mix across Industrials, Technology, Healthcare, and Financials. In environments favoring broad-based, quality-driven gains, XMHQ's diversification and lower cost have supported steadier relative positioning.

AI Screener

Tickeron's AI Screener is an AI-powered stock and ETF discovery tool that helps traders and investors filter the market based on technical patterns, fundamentals, trends, volatility, and AI-driven signals. Users can scan thousands of stocks and ETFs using customizable filters such as industry, market capitalization, technical indicators, price patterns, and performance metrics. The screener is designed to surface trade ideas, trending stocks, breakout candidates, and market opportunities far more efficiently than manual screening. Explore the AI Screener to streamline your research and identify opportunities that match your criteria.

Tickeron AI Verdict

Based on observable structural factors, Tickeron's AI would likely favor XMHQ over XMMO. XMHQ offers a lower expense ratio (0.25% versus 0.34%–0.35%), broader and more balanced sector exposure, a higher average return on equity among holdings, and historically lower volatility and beta. While XMMO's momentum approach can outperform in strong trending markets, its concentrated Industrials allocation and higher risk profile introduce greater sensitivity to sector rotation. Given the combination of cost efficiency, diversification, quality-driven fundamentals, and reduced risk exposure, XMHQ presents a more robust structural profile for most investors seeking mid-cap exposure in the current environment.

Disclaimer

The information on this webpage is provided for general informational and educational purposes only and is not intended as investment advice, a recommendation to purchase or sell any security, or an offer or solicitation related to investments. It does not consider your personal financial situation, goals, or risk profile, and all investing carries inherent risks, including the possibility of losing your entire investment. For more details, please review our full disclaimer.

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