Invesco S&P SmallCap Momentum ETF (XSMO): 4-Year Track Record of Exceptional Performance

The Invesco S&P SmallCap Momentum ETF (XSMO) tracks the S&P SmallCap 600 Index and selects 120 stocks with the best price returns over the past twelve months. Since its inception on June 21, 2019, the ETF has exhibited strong growth in assets, with a total net asset value of $2.2 billion and an average daily trading volume of 57,000 shares. The ETF has a total expense ratio of 0.35%, making it a low-cost option for investors seeking exposure to small-cap momentum stocks.

The Invesco S&P SmallCap Momentum ETF (XSMO) has demonstrated robust performance since its inception on June 21, 2019, tracking the S&P SmallCap 600 Index and selecting 120 stocks with the best price returns over the past twelve months. As of July 2, 2025, the ETF has amassed a total net asset value of $2.2 billion and enjoys an average daily trading volume of 57,000 shares. With a total expense ratio of 0.35%, XSMO presents a low-cost option for investors seeking exposure to small-cap momentum stocks.

XSMO's performance has been notable, with a 94.27% total return since its inception, outperforming the broader S&P SmallCap 600 Index by 33% and the SPDR S&P 600 Small Cap Growth ETF (SLYG) by 34% [1]. This strong performance can be attributed to the ETF's strategy, which focuses on the momentum factor, selecting the top 120 stocks with the highest momentum scores. The strategy involves semi-annual reconstitutions, ensuring that the portfolio remains aligned with the latest market trends.

The ETF's high portfolio turnover, ranging between 107-132% annually, reflects the volatility inherent in small-cap stocks. This turnover is necessary to capture the best-performing stocks and limit style drift. The high turnover also indicates a dynamic and responsive investment approach, which can be beneficial in volatile markets.

XSMO's sector allocations are diversified, with a significant exposure to Health Care (14.30%) and Financials (20.00%). The ETF's sector diversification score is slightly below average, but this does not appear to be a major concern. The ETF's focus on momentum has led to strong price momentum, with its current holdings up 46.49% over the last year, compared to 13.22% for the broader S&P SmallCap 600 Index [1].

Fundamentally, XSMO's top 25 holdings account for 44.03% of the fund, with an average net margin of 10.84% and a debt-free cash flow ratio of 5.81x. The ETF's weighted average return on equity (ROE) is 15.89%, indicating efficient use of shareholder capital. The ETF's forward price-to-earnings (P/E) ratio of 17.44x is considered a bargain, given its 21.00% estimated earnings per share growth rate. This makes XSMO an attractive investment option for growth-oriented investors.

In conclusion, the Invesco S&P SmallCap Momentum ETF (XSMO) offers a compelling investment proposition for those seeking exposure to small-cap momentum stocks. Its strong performance, low cost, and solid fundamentals make it an attractive option for investors and financial professionals alike. However, as with any investment, it is essential to conduct thorough research and consider one's risk tolerance before making a decision.

References:
[1] Seeking Alpha. "XSMO: Outstanding GARP Stats for This Small-Cap Momentum ETF." https://seekingalpha.com/article/4801489-xsmo-outstanding-garp-stats-for-this-small-cap-momentum-etf