Is Invesco S&P MidCap 400 Equal Weight ETF (EWMC) a Strong ETF Right Now?
Making its debut on 12/03/2010, smart beta exchange traded fund Invesco S&P MidCap 400 Equal Weight ETF (EWMC) provides investors broad exposure to the Style Box - Mid Cap Blend category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Managed by Invesco, EWMC has amassed assets over $201.85 million, making it one of the average sized ETFs in the Style Box - Mid Cap Blend. Before fees and expenses, EWMC seeks to match the performance of the S&P MidCap 400 Equal Weight Index.
The S&P MidCap 400 Equal Weight Index equally weights mid-cap securities in the S&P MidCap 400 Index.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.40% for this ETF, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.22%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
Representing 19.20% of the portfolio, the fund has heaviest allocation to the Industrials sector; Consumer Discretionary and Financials round out the top three.
When you look at individual holdings, Gamestop Corp (GME) accounts for about 0.33% of the fund's total assets, followed by Blackbaud Inc (BLKB) and Shockwave Medical Inc (SWAV).
Its top 10 holdings account for approximately 2.96% of EWMC's total assets under management.
Performance and Risk
Year-to-date, the Invesco S&P MidCap 400 Equal Weight ETF return is roughly 7.50% so far, and was up about 2.84% over the last 12 months (as of 06/08/2023). EWMC has traded between $75.06 and $95.15 in this past 52-week period.
The ETF has a beta of 1.20 and standard deviation of 22.79% for the trailing three-year period, making it a medium risk choice in the space. With about 402 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco S&P MidCap 400 Equal Weight ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Mid-Cap ETF (VO) tracks CRSP US Mid Cap Index and the iShares Core S&P Mid-Cap ETF (IJH) tracks S&P MidCap 400 Index. Vanguard Mid-Cap ETF has $51.98 billion in assets, iShares Core S&P Mid-Cap ETF has $67.68 billion. VO has an expense ratio of 0.04% and IJH charges 0.05%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Mid Cap Blend.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Invesco S&P MidCap 400 Equal Weight ETF (EWMC): ETF Research Reports
GameStop Corp. (GME) : Free Stock Analysis Report
Blackbaud, Inc. (BLKB) : Free Stock Analysis Report
iShares Core S&P Mid-Cap ETF (IJH): ETF Research Reports
Vanguard Mid-Cap ETF (VO): ETF Research Reports
ShockWave Medical, Inc. (SWAV) : Free Stock Analysis Report
