It's possible to achieve quite secure group chats in XMPP, as long as you have a server that you trust (emphasis on that last part). You're probably talking about OTR though, which is quite tricky for multi-party situations.
This isn't XMPP's or OTR's fault - from a high level to have a secure multi-party discussion, every participant must individually verify every other participant. This creates a lot of overhead with large groups. What you can do instead is to delegate your trust to, say, a key member of the group - if they trust every member, so do you. This is the model that XMPP supports. Set up a server that only accepts encrypted and securely-authenticated connections (using whichever mechanism you have the most faith in) and only grant access to the room to trusted individuals.
I had heard TextSecure/WhisperPush (which uses OTR-like protocol with similar properties) has multiparty/group secure conversations. However I'm unaware of any attempts to apply those to XMPP MUCs, neither I've seen any vetted solution for end-to-end encrypted MUCs.
This isn't XMPP's or OTR's fault - from a high level to have a secure multi-party discussion, every participant must individually verify every other participant. This creates a lot of overhead with large groups. What you can do instead is to delegate your trust to, say, a key member of the group - if they trust every member, so do you. This is the model that XMPP supports. Set up a server that only accepts encrypted and securely-authenticated connections (using whichever mechanism you have the most faith in) and only grant access to the room to trusted individuals.