Invesco S&P 500 Quality ETF

SPHQ

Market cap $15.2B

The S&P 500‘s 2.7% drop on Friday expose its tech-heavy tilt. Top 10 stocks represent 37% of the index's weight, while the Magnificent 7 account for about 35% of YTD gains.

The Invesco S&P 500 Quality ETF (SPHQ) made its debut on 12/06/2005, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Large Cap Blend category of the market.

Inflation rose in August, but jobless claims rose, too, shaping Fed rate cut odds and boosting the appeal of large-cap blend ETFs like ITOT, EDOW and IVV.

Goldman Sachs warns of rising AI bubble risks, making diversification with equal-weight, value and quality ETFs a smart defensive move.

SPHQ offers a defensive, quality-focused approach, overweighting mature sectors like industrials and consumer staples while underweighting big tech compared to the S&P 500. The fund's valuation is in line with the S&P 500, but it boasts a higher return on equity and lower volatility than the index. SPHQ has outperformed its quality ETF peer group over three and five years, with the lowest volatility and strong risk-adjusted returns.

I maintain my buy rating on SPHQ, as it consistently delivers strong risk-adjusted returns for low to moderate risk-tolerance investors. SPHQ is well-positioned to benefit from upcoming rate cuts, improving economic growth, and robust earnings, supporting a bullish market outlook. The ETF's diversified portfolio of high-quality stocks, especially in tech and industrials, helps capture upside while limiting volatility in downturns.

The Invesco S&P 500 Quality ETF (SPHQ) was launched on 12/06/2005, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Large Cap Blend category of the market.

Markets hit new record with bets on a "Goldilocks" economy, but volatility persists. AI and international ETFs like QQQ, IVES and EZU could be good bets for 2H.

As policy risks rise and stagflation fears grow, investors turn to defensive ETFs to weather a volatile 2025 market.

SPHQ, VO and VTI topped ETF inflows last week as investors poured $37.7B into funds across equity and fixed-income segments.