The Invesco S&P 500 Pure Growth ETF (RPG) was launched on 03/01/2006, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Large Cap Growth category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
RPG is managed by Invesco, and this fund has amassed over $2.83 billion, which makes it one of the average sized ETFs in the Style Box - Large Cap Growth. RPG, before fees and expenses, seeks to match the performance of the S&P 500 Pure Growth Index.
The S&P 500 Pure Growth Index measures the performance of securities that exhibit strong growth characteristics in the S&P 500 Index.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for this ETF are 0.35%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
For RPG, it has heaviest allocation in the Information Technology sector --about 41% of the portfolio --while Healthcare and Consumer Discretionary round out the top three.
When you look at individual holdings, Tesla Inc (NASDAQ:TSLA) accounts for about 2.94% of the fund's total assets, followed by Nvidia Corp (NVDA) and Etsy Inc (NASDAQ:ETSY).
The top 10 holdings account for about 24.09% of total assets under management.
Performance and Risk
Year-to-date, the Invesco S&P 500 Pure Growth ETF has lost about -16.54% so far, and is up about 3.77% over the last 12 months (as of 01/27/2022). RPG has traded between $151.58 and $220.95 in this past 52-week period.
The fund has a beta of 1.09 and standard deviation of 25.90% for the trailing three-year period, which makes RPG a medium risk choice in this particular space. With about 76 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco S&P 500 Pure Growth ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Growth segment of the market. There are other ETFs in the space which investors could consider as well.
Vanguard Growth ETF (VUG) tracks CRSP U.S. Large Cap Growth Index and the Invesco QQQ (QQQ) tracks NASDAQ-100 Index. Vanguard Growth ETF has $77.39 billion in assets, Invesco QQQ has $183.50 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Growth.
Bottom Line
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
NVIDIA Corporation (NASDAQ:NVDA): Free Stock Analysis Report
Tesla, Inc. (TSLA): Free Stock Analysis Report
Invesco QQQ (QQQ): ETF Research Reports
Etsy, Inc. (ETSY): Free Stock Analysis Report
Vanguard Growth ETF (VUG): ETF Research Reports
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