XSMO: A Well-Constructed Small Cap ETF That Could Do Well After A Pullback

The Invesco S&P SmallCap Momentum ETF (XSMO), which is the number 1 ranked product on Seeking Alpha's Quant rating table of small-cap ETFs, is outperforming the Russell 2000 by 1.55x this year. XSMO's portfolio construction emphasizes risk-adjusted momentum and quality, avoiding micro-caps and loss-making stocks, while also tilting towards those with a persistent long-term trend. High annual turnover (115%) and semi-annual rebalancing introduce potential drag and lag in responding to momentum shifts.