Designed to provide broad exposure to the Large Cap Growth segment of the US equity market, the Invesco S&P 500 Pure Growth ETF (RPG) is a passively managed exchange traded fund launched on 03/01/2006.
The fund is sponsored by Invesco. It has amassed assets over $1.76 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
Large cap companies usually 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. 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.
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 0.35%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.44%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Energy sector--about 26.70% of the portfolio. Healthcare and Information Technology round out the top three.
Looking at individual holdings, Diamondback Energy Inc (FANG) accounts for about 2.68% of total assets, followed by Targa Resources Corp (TRGP) and Coterra Energy Inc (CTRA).
The top 10 holdings account for about 24.35% 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 added about 7.72% so far this year and is up about 6.36% in the last one year (as of 12/26/2023). In the past 52-week period, it has traded between $28.62 and $32.21.
The ETF has a beta of 1.10 and standard deviation of 23.87% for the trailing three-year period, making it a medium risk choice in the space. With about 82 holdings, it effectively diversifies company-specific risk.
Alternatives
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 $103.53 billion in assets, Invesco QQQ has $227.26 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.
Bottom-Line
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
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
Invesco QQQ (QQQ): ETF Research Reports
Diamondback Energy, Inc. (FANG) : Free Stock Analysis Report
Targa Resources, Inc. (TRGP) : Free Stock Analysis Report
Vanguard Growth ETF (VUG): ETF Research Reports
Coterra Energy Inc. (CTRA) : Free Stock Analysis Report
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December 26, 2023 at 06:20PM
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Should Invesco S&P 500 Pure Growth ETF (RPG) Be on Your Investing Radar? - Yahoo Finance
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