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Should Invesco S&P 500 GARP ETF (SPGP) Be on Your Investing Radar?

The Invesco S&P 500 GARP ETF (SPGP) was launched on 06/17/2011, and is a passively managed exchange traded fund designed to offer broad exposure to the Large Cap Growth segment of the US equity market.

The fund is sponsored by Invesco. It has amassed assets over $2.75 billion, 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 above $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.

Qualities of growth stocks include faster growth rates compared to the broader market, as well as higher valuations and higher than average sales and earnings growth rates. Further, growth stocks have a higher level of volatility associated with them. 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.

Costs

When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

Annual operating expenses for this ETF are 0.33%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.13%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Healthcare sector--about 25.60% of the portfolio. Information Technology and Financials round out the top three.

Looking at individual holdings, Moderna Inc (MRNA) accounts for about 2.47% of total assets, followed by Nrg Energy Inc (NRG) and Qorvo Inc (QRVO).

The top 10 holdings account for about 19.69% 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 gained about 7.59% so far this year and is down about -0.04% in the last one year (as of 03/06/2023). In the past 52-week period, it has traded between $74.83 and $93.20.

The ETF has a beta of 1.12 and standard deviation of 28.93% for the trailing three-year period. With about 76 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco S&P 500 GARP ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, SPGP is a reasonable option for those seeking exposure to the Style Box - Large Cap Growth area of the market. Investors might also want to consider some other ETF options in the space.

The Vanguard Growth ETF (VUG) and the Invesco QQQ (QQQ) track a similar index. While Vanguard Growth ETF has $76.49 billion in assets, Invesco QQQ has $160.01 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.

Bottom-Line

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.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Invesco S&P 500 GARP ETF (SPGP): ETF Research Reports

NRG Energy, Inc. (NRG) : Free Stock Analysis Report

Moderna, Inc. (MRNA) : Free Stock Analysis Report

Invesco QQQ (QQQ): ETF Research Reports

Qorvo, Inc. (QRVO) : Free Stock Analysis Report

Vanguard Growth ETF (VUG): ETF Research Reports

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Zacks Investment Research

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