Launched on 03/01/2006, the Invesco S&P 500 Pure Growth ETF (RPG) is a passively managed exchange traded fund designed to provide a broad exposure to the Large Cap Growth segment of the US equity market.
The fund is sponsored by Invesco. It has amassed assets over $2.33 billion, 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
Companies that find themselves in the large cap category 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.
Growth stocks have higher than average sales and earnings growth rates. While these are expected to grow faster than the broader market, they also have higher valuations. Something to keep in mind is the higher level of volatility that is affiliated with growth stocks. Even though growth stocks are more likely to outperform their value counterparts in strong bull markets, value stocks have a record of delivering better returns in almost all markets than growth stocks.
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 0.35%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.19%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Information Technology sector–about 34.40% of the portfolio. Healthcare and Consumer Discretionary round out the top three.
Looking at individual holdings, Fortinet Inc (FTNT) accounts for about 3.43% of total assets, followed by Nrg Energy Inc (NRG) and Diamondback Energy Inc (FANG).
The top 10 holdings account for about 27.24% of total assets under management.
Performance and Risk
RPG seeks to match the performance of the S&P 500 Pure Growth Index before fees and expenses. The S&P 500 Pure Growth Index measures the performance of securities that exhibit strong growth characteristics in the S&P 500 Index.
The ETF has lost about -23.86% so far this year and is down about -14.21% in the last one year (as of 07/21/2022). In the past 52-week period, it has traded between $142.53 and $220.95.
The ETF has a beta of 1.15 and standard deviation of 29.23% for the trailing three-year period, making it a medium risk choice in the space. With about 58 holdings, it effectively diversifies company-specific risk.
Invesco S&P 500 Pure Growth 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, RPG 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 $71.65 billion in assets, Invesco QQQ has $166.97 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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Invesco S&P 500 Pure Growth ETF (RPG): ETF Research Reports
NRG Energy, Inc. (NRG) : Free Stock Analysis Report
Invesco QQQ (QQQ): ETF Research Reports
Fortinet, Inc. (FTNT) : Free Stock Analysis Report
Diamondback Energy, Inc. (FANG) : Free Stock Analysis Report
Vanguard Growth ETF (VUG): ETF Research Reports
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