Designed to provide broad exposure to the Large Cap Growth segment of the US equity market, the Invesco S&P 500 GARP ETF (SPGP) is a passively managed exchange traded fund launched on 06/17/2011.
The fund is sponsored by Invesco. It has amassed assets over $823.52 million, making it one of the average sized ETFs attempting to match the Large Cap Growth segment of the US equity market.
Why Large Cap Growth
Large cap companies typically have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.
While growth stocks do boast higher than average sales and earnings growth rates, and they are expected to grow faster than the wider market, investors should note these kinds of stocks have higher valuations. Something to keep in mind is the higher level of volatility that is affiliated with growth stocks. They are likely to outperform value stocks in strong bull markets but over the longer-term, value stocks have delivered better returns than growth stocks in almost all markets.
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF’s expense ratio.
Annual operating expenses for this ETF are 0.36%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.76%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund’s holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Healthcare sector–about 28.80% of the portfolio. Information Technology and Financials round out the top three.
Looking at individual holdings, Fortinet Inc (FTNT) accounts for about 2.84% of total assets, followed by Etsy Inc (ETSY) and Adobe Inc (ADBE).
The top 10 holdings account for about 19.95% of total assets under management.
Performance and Risk
SPGP seeks to match the performance of the S&P 500 GROWTH AT A REASONABLE PRICE IDX before fees and expenses. The S&P 500 Growth at a Reasonable Price Index is composed of securities with strong growth characteristics selected from the Russell Top 200 Index.
The ETF has lost about -8.62% so far this year and is up roughly 13.82% in the last one year (as of 02/21/2022). In the past 52-week period, it has traded between $77.15 and $97.61.
The ETF has a beta of 1.18 and standard deviation of 27.37% for the trailing three-year period. With about 76 holdings, it effectively diversifies company-specific risk.
Invesco S&P 500 GARP ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, SPGP is a great option for investors seeking exposure to the Style Box – Large Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.
The Vanguard Growth ETF (VUG) and the Invesco QQQ (QQQ) track a similar index. While Vanguard Growth ETF has $77.38 billion in assets, Invesco QQQ has $179.50 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
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 Zacks ETF Center.
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