1 Overlooked ETF That Deserves a Spot in More Portfolios

2026 whitethorn beryllium known truthful acold arsenic the twelvemonth that investors yet rotated distant from mega-cap tech and maturation stocks. It besides represents the re-emergence of 1 of the market's astir important themes -- quality.

Owning prime companies ne'er truly goes retired of style. It whitethorn beryllium successful oregon retired of favour with the markets astatine immoderate fixed constituent successful time, but the thought of filling your portfolio with companies that person steadfast equilibrium sheets, beardown currency flows, and increasing profits should beryllium everlasting.

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Throughout the past fewer years, the prime origin has done particularly good fixed that respective of the names astatine the apical of the Invesco S&P 500 Quality ETF (NYSEMKT: SPHQ) were the Magnificent Seven stocks. Not surprisingly, it wasn't capable to support up with the Nasdaq 100 since the opening of 2023, but it did outperform the S&P 500 (SNPINDEX: ^GSPC). And it did it with astir 10% little volatility.

SPHQ Total Return Level information by YCharts

Given that much than 25% of this ETF's portfolio is presently dedicated to tech stocks (and has been for a while), it would marque consciousness if we saw the Invesco S&P 500 Quality ETF lag a spot alongside it.

Instead, this ETF is up much than 7% twelvemonth to day (as Feb. 25, 2026), mode up of the 1% instrumentality for the S&P 500 and the level show of the Nasdaq 100.

How is this money doing arsenic good arsenic it was erstwhile mega-cap tech was some starring and lagging?

This ETF selects companies from the S&P 500 scale based connected 3 factors: instrumentality connected equity (ROE), the accruals ratio, and the fiscal leverage ratio. A prime people is calculated for each banal based connected these metrics. The stocks with the 100 highest prime scores are included successful the portfolio, with each components getting score-weighted.

If you look astatine the fund's apical 10 holdings from a twelvemonth ago, they see Meta Platforms, Apple, Netflix, and Nvidia all receiving weightings of astatine slightest 4%. Today, Apple and Lam Research are the lone tech names successful the fund's apical 10. Meta, Netflix, and Nvidia are obscurity to beryllium found.

What happened? The circumstantial enactment methodology is simply a spot of a achromatic box. Is it imaginable that AI-related capex spending raised the fiscal leverage ratio of these companies capable to footwear them retired of the index? It's hard to accidental for sure, but the portfolio seems to person reconstituted itself successful the close mode implicit the past 12 months.