Time and time again, investors will hear advisors and experts tell them how important it is to carefully check what securities a fund holds before adding it to their portfolios. This holds true for any investment strategy — whether it is a simple approach, a complex framework or a targeted play on midcap momentum.
- After years of speculation on when midcaps would offer a potent position in investor portfolios, 2026 is proving to be a good year for the asset class.
- The (XMMO ) is a widely used vehicle for gaining access to compelling midcaps, and offers a surprising tilt towards industrials.
- Industrials are benefitting from the AI race’s need for electricity, creating favorable tailwinds for the sector.
Consider what’s going on with mid-cap equities, for example. After years of waiting for the potential of a midcap comeback, attractive valuations and the need for diversification are creating a compelling opportunity for investors in the mid-cap space.
Those looking to take advantage of the opportunity within midcaps might want to consider a fund like the (XMMO ). As one would expect from its name, XMMO invests in funds within the S&P 400 Midcap Index that are displaying significant degrees of momentum.
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Momentum may be easy to understand, but XMMO’s portfolio constitution may come as a surprise. If one were to guess the fund’s top sector holding, the natural assumptions might be information technology (IT), financial services, health care, or even consumer discretionary. However, none of those are correct. Industrials remain as the fund’s top holding sector, as of May 31, 2026.
In fact, the lead industrials have over the other sectors in XMMO’s portfolio is even more significant than some may expect. As of May 31, 2026, industrials represent 42.51% of the fund’s holdings, with information technology (IT) being the next largest slice at 16.56%.
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This heavy tilt towards industrials could offer plenty of applications in the months and potentially years to come. With the rapid expansion of AI accelerating the demand for electricity, companies within this sector are uniquely positioned to benefit from this highly favorable tailwind.
XMMO is a prime example of why it’s important to take a close look at all the elements constructing a strategy, and not just focus on the title or general investment philosophy. Yes, XMMO is primarily a momentum fund, but currently, those choosing to invest in it are benefitting from its heavy tilt towards the favorable industrials sector.
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Thus far, the fund’s investment base has been rewarded with highly attractive returns this year. Year to date, XMMO’s NAV has risen 22.11%, as of May 31, 2026.
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