Invesco S&P 500 GARP ETF (SPGP) was launched on 06/17/2011, and is a passively managed exchange traded fund designed to provide broad exposure to the large cap growth segment of the US equity market .
The fund is sponsored by Invesco. It has amassed more than $3.35 billion in assets, making it one of the larger 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 of more than $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.
While growth stocks boast higher than average sales and earnings growth rates, and are expected to grow faster than the broader market, investors should note that these types of stocks tend to be overvalued. Something to keep in mind is the high level of volatility that is associated with growth stocks. In strong bull markets they are likely to outperform value stocks, but over the long term, value stocks have delivered better returns than growth stocks in almost all markets.
Expense ratios are an important factor in ETF returns and over the long term, cheaper funds may outperform their more expensive counterparts, other things remaining equal.
The annual operating expenses for this ETF are 0.33%, which puts it on par with most peer products in the sector.
Its trailing 12-month dividend yield is 1.08%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, it’s still important to look at the fund’s holdings before investing. Fortunately, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has the largest allocation to the energy sector – approximately 26.80% of the portfolio. Information technology and materials are in the top three.
Looking at individual holdings, Marathon Petroleum Corp (MPC) accounts for about 2.21% of total assets, followed by Diamondback Energy Inc (FANG) and CF Industries Holdings Inc (CF).
The top 10 holdings account for about 19.88% of total assets under management.
performance and risk
SPGP seeks to match the performance of the S&P 500 Growth on the Fair Value IDX before fees and expenses. The S&P 500 Growth on Fair Value Index is composed of securities with strong growth characteristics selected from the Russell Top 200 Index.
The ETF return is about 14.57% so far this year and it is up about 12.96% over the past year (as of 09/11/2023). Over the past 52-week period, it has traded between $74.83 and $96.18.
The ETF’s beta for the last three-year period is 1.11 and standard deviation is 19.02%. With approximately 77 holdings, it effectively diversifies company-specific risk.
The Invesco S&P 500 GARP ETF has a Zacks ETF Rank 3 (Hold), based on expected asset class returns, expense ratio and momentum, among other factors. Thus, SPGP is an adequate option for those looking to invest in the Style Box – Large Cap Growth sector of the market. Investors may also want to consider some other ETF options in this sector.
The Vanguard Growth ETF (VUG) and Invesco QQQ (QQQ) track a similar index. While Vanguard Growth ETF has assets of $93.12 billion, Invesco QQQ has assets of $204.79 billion. VUG has an expense ratio of 0.04% and QQQ fees 0.20%.
Retail and institutional investors are increasingly turning to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; These types of funds are also excellent instruments for long-term investors.
To learn more about this product and other ETFs, research products that match your investment objectives, and read articles on the latest developments in the ETF investing world, please visit the Zacks ETF Center.
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Invesco S&P 500 GARP ETF (SPGP): ETF Research Report
CF Industries Holdings, Inc. (CF): Free Stock Analysis Report
Marathon Petroleum Corporation (MPC): Free Stock Analysis Report
Invesco QQQ (QQQ): ETF Research Report
Diamondback Energy, Inc. (Fang): Free Stock Analysis Report
Vanguard Growth ETF (VUG): ETF Research Report
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