Mid-cap stocks can make for attractive stocks to hold for the long term. While they are already fairly established businesses, with valuations of up to $10 billion, they can still possess much more upside in the long run. As a result, they can be great options for long-term and growth-oriented investors.
One exchange-traded fund (ETF) that gives exposure to strong mid-cap stocks is the Invesco S&P MidCap Quality ETF (NYSE Arca:XMHQ). It primarily invests in mid-cap companies with high quality scores. These scores are computed based on a composite of three proprietary factors. The ETF closely follows the S&P MidCap 400 Quality Index, investing 90% or more of its assets in the securities that make up this index. The fund is rebalanced semi-annually and holds around 80 securities.
XMHQ is diversified across various sectors, with the most significant investments in industrials (31%), consumer discretionary (17%), financials (14%), information technology (12%), and energy (9%). This diversification can help mitigate risk and leverage growth across different sectors of the economy. The top names in the fund include software company Manhattan Associates (NASDAQ:MANH), fashion and footwear business Deckers Outdoor (NYSE:DECK), and specialty retailer Williams-Sonoma (NYSE:WSM), with each of those stocks accounting for more than 2.5% of the ETF’s weight.
The fund’s net expense ratio of 0.25% is also fairly modest, ensuring that investors won’t lose much of their returns to fees. In 2023, the fund’s total return was just under 30%.
For investors who don’t want to buy shares of overpriced tech stocks or the “magnificent seven”, this mid-cap ETF could make for a viable investment option today.