Is Invesco S&P 500 Quality ETF (SPHQ) a Strong ETF Right Now?

Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.

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.

This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.

Fund Sponsor & Index

Managed by Invesco, SPHQ has amassed assets over $19.45 billion, making it one of the largest ETFs in the Style Box - Large Cap Blend. SPHQ, before fees and expenses, seeks to match the performance of the S&P 500 Quality Index.

The S&P 500 Quality Index tracks the performance of stocks in the S&P 500 Index that have the highest quality score, which is calculated based on three fundamental measures, return on equity, accruals ratio and financial leverage ratio.

Cost & Other Expenses

When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.

Operating expenses on an annual basis are 0.15% for SPHQ, making it one of the cheaper products in the space.

It's 12-month trailing dividend yield comes in at 1.10%.

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.

SPHQ's heaviest allocation is in the Information Technology sector, which is about 29.4% of the portfolio. Its Industrials and Consumer Staples round out the top three.

When you look at individual holdings, Lam Research Corp (LRCX) accounts for about 4.92% of the fund's total assets, followed by Apple Inc (AAPL) and Costco Wholesale Corp (COST).

SPHQ's top 10 holdings account for about 42.14% of its total assets under management.

Performance and Risk

The ETF return is roughly 13.96% and is up roughly 17.9% so far this year and in the past one year (as of 07/28/2026), respectively. SPHQ has traded between $70.81 and $90.10 during this last 52-week period.

SPHQ has a beta of 0.90 and standard deviation of 14.44% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 102 holdings, it effectively diversifies company-specific risk .

Alternatives

Invesco S&P 500 Quality ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. There are other ETFs in the space which investors could consider as well.

iShares Core Dividend Growth ETF (DGRO) tracks Morningstar US Dividend Growth Index and the Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) tracks NASDAQ US Dividend Achievers Select Index. iShares Core Dividend Growth ETF has $42.83 billion in assets, Vanguard Dividend Appreciation Index Fund ETF Shares has $111.66 billion. DGRO has an expense ratio of 0.08% and VIG changes 0.04%.

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 - Large 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

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This article originally published on Zacks Investment Research (zacks.com).

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