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Another Mid-Cap Star

ETF Professor

Mid-cap growth has been a potent combination this year as confirmed by numerous exchange traded funds in this category outperforming standard mid-cap funds.

Add the Invesco Russell MidCap Pure Growth ETF (NYSE: PXMG) to that list.

What Happened

After hitting an all-time high on Thursday, the Invesco Russell MidCap Pure Growth ETF is up 29.7 percent year to date, meaning it's beating the S&P MidCap 400 Index by 1,200 basis points since the start of the year.

PXMG, which turned 14 years old last month, tracks the Russell Midcap Pure Growth Index. That benchmark differs from the Russell MidCap Growth Index as highlighted by the fact that PXMG is beating the Russell MidCap Growth Index by 670 basis points this year.

Why It's Important

PXMG's underlying index pulls stocks with strong growth traits from the Russell Midcap Index and ranks those stocks using a style score. The $595.6 million funds has a four-star rating from Morningstar and has displayed dominant performance against comparable peers.

Over the past three years, PXMG is up 105.3 percent, meaning it has more than doubled the returns of the S&P MidCap 400 and the S&P MidCap 400 Growth benchmarks over that time. Over the same period, the Russell MidCap Growth Index is up “just” 58.3 percent. During that span, PXMG was an average of 340 basis points more volatile than those three mid-cap benchmarks, indicating the Invesco fund delivered superior risk-adjusted returns.

That performance has elevated the average market capitalization of PXMG's 95 holdings to $15.32 billion, putting the fund in large-cap territory.

What's Next

As is the case with many large-cap growth strategies, PXMG is heavily allocated to the technology and consumer discretionary sectors. Those groups combine for about two-thirds of the fund's weight.

Several of PXMG's marquee components are on torrid paces. For example, Chipotle Mexican Grill, Inc. (NYSE: CMG) is up almost 64 percent year to date while Ulta Beauty Inc. (NASDAQ: ULTA) is higher by 43 percent. Those stocks are PXMG's largest and third-largest holdings, respectively, combining for 5.76 percent of the fund's weight.

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