WisdomTree U.S. MidCap Quality Growth Fund (QMID) seeks to track an index of mid-capitalization U.S. companies that demonstrate both quality characteristics and growth potential. The underlying index selects companies based on fundamental quality metrics like return on equity and earnings stability, then weights them by growth factors including revenue and earnings growth rates.
How It Works
QMID uses a rules-based methodology that first screens mid-cap stocks for quality metrics such as return on assets, debt-to-equity ratios, and earnings variability. From this quality universe, the fund then applies growth screens focusing on revenue growth, earnings growth, and sales growth over multiple time periods. Holdings are weighted by a composite growth score rather than market capitalization, giving higher allocations to companies with stronger growth characteristics. The index rebalances semi-annually to maintain exposure to the highest-quality growth companies.
Key Features
- Combines quality and growth factors in single mid-cap ETF, avoiding the value trap of pure growth strategies
- Fundamental weighting by growth metrics rather than market cap potentially reduces concentration in overvalued momentum stocks
- Recently launched in January 2024, offering modern factor methodology with competitive 0.00% promotional expense ratio
Risks
- This ETF can lose value if growth stocks fall out of favor, as growth-focused mid-caps often decline 40-50% during market rotations to value
- Quality and growth factors may underperform during certain market cycles, particularly when investors favor deep value or distressed companies
- Mid-cap stocks typically experience higher volatility than large-caps, with potential for 20-30% swings during normal market fluctuations
Who Should Own This
Best suited as a satellite holding (10-20% of equity allocation) for growth-oriented investors with 3-7 year time horizons seeking mid-cap exposure with quality guardrails. Medium-to-high risk tolerance required due to growth stock volatility and mid-cap concentration. Ideal for investors wanting factor-based mid-cap exposure without the extreme volatility of pure growth strategies.