Should the Invesco S&P 500 GARP ETF (SPGP) be on your Investment Radar?

Are you looking for broad exposure to the Large Growth Sector of the US stock market? You should consider the Invesco S&P 500 GARP ETF (SPGP), a gently managed exchange-traded fund launched on 06/17/2011.

The fund is sponsored by Invesco. It has accumulated more than $4.28 billion in assets, making it one of the largest ETFs attempting to align with the High-Cap Growth segment of the US stock market.

Why the Great Growth of Hats

Large companies tend to have a market capitalization of more than $10 billion. In general, they are a stable choice, with less risk and more reliable cash flow than medium and small companies.

Although growth stocks boast higher than average growth rates in sales and earnings, and are expected to grow faster than the broader market, investors should note these types of stocks have high valuations. Additionally, growth stocks have a high level of volatility associated with them. Compared to value stocks, growth stocks are safer bets in strong bull markets, but underperform in almost all other financial environments.

Cost

When considering the total return of an ETF, the expense ratio is an important factor, and cheaper funds can outperform their more expensive counterparts over the long term if all other factors remain equal.

Annual operating expenses for this ETF are 0.34%, putting it in line with many other products in this space.

it has a trailing 12-month dividend yield of 1.38%.

Industry Definition and Top Holdings

Although ETFs provide diversified exposure, which reduces the risk of a single stock, a thorough examination of the fund’s holdings is an important exercise. And, most ETFs are transparent products that disclose their holdings on a daily basis.

This ETF has the largest allocation to the Energy sector–about 23.70% of the portfolio. Information Technology and Industry complete the top three.

Looking at individual assets, Eog Resources Inc (EOG) accounts for about 2.29% of total assets, followed by Marathon Petroleum Corp (MPC) and Valero Energy Corp (VLO).

The top 10 stocks account for about 20.29% of total assets under management.

Performance and Risk

SPGP seeks to compare the performance of the S&P 500 GROWTH TO THE LARGE PRICE IDX before fees and expenses. The S&P 500 Growth by Real Price Index includes securities with strong growth characteristics selected from the Russell Top 200 Index.

The ETF’s return is about 7.98% so far this year and has risen about 17.58% over the past year (as of 10/03/2024). Over the past 52 weeks, it has traded between $86.55 and $106.72.

The ETF has a beta of 1.08 and a standard deviation of 18.43% over the next three years. With about 77 stocks, it effectively diversifies company-specific risks.

An Alternative

Invesco S&P 500 GARP ETF has a Zacks ETF Rank of 3 (Hold), which is based on expected asset class returns, expense ratio and momentum, among other factors. Therefore, SPGP is a good choice for those looking for exposure to the Style Box – a High Growth area of the market. Investors may also want to consider other ETF options in the space.

Vanguard Growth ETF (VUG) and Invesco QQQ (QQQ) track the same index. While the Vanguard Growth ETF has $138.02 billion in assets, the Invesco QQQ has $293.16 billion. VUG has an expense ratio of 0.04% and a QQQ payout of 0.20%.

The bottom line

Although an ideal vehicle for long-term investors, 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, view products that match your investment goals and read articles about the latest developments in the world of ETF investing, please visit the Zacks ETF Center.

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