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Should iShares S&P 500 Growth ETF (IVW) Be on Your Investing Radar?

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Designed to provide broad exposure to the Large Cap Growth segment of the US equity market, the iShares S&P 500 Growth ETF (IVW - Free Report) is a passively managed exchange traded fund launched on 05/22/2000.

The fund is sponsored by Blackrock. It has amassed assets over $26.54 billion, making it one of the largest 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.

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.

Costs

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for this ETF are 0.18%, making it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 0.84%.

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 Information Technology sector--about 45.40% of the portfolio. Consumer Discretionary and Healthcare round out the top three.

Looking at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 14.71% of total assets, followed by Microsoft Corp (MSFT - Free Report) and Amazon Com Inc (AMZN - Free Report) .

The top 10 holdings account for about 52.14% of total assets under management.

Performance and Risk

IVW seeks to match the performance of the S&P 500 Growth Index before fees and expenses. The S&P 500 Growth Index measures the performance of the large capitalization growth sector of the U.S. equity market.

The ETF has lost about -32.26% so far this year and is down about -29.82% in the last one year (as of 11/04/2022). In the past 52-week period, it has traded between $56.73 and $84.81.

The ETF has a beta of 1.05 and standard deviation of 27.54% for the trailing three-year period, making it a medium risk choice in the space. With about 244 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares S&P 500 Growth 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, IVW is a good 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 - Free Report) and the Invesco QQQ (QQQ - Free Report) track a similar index. While Vanguard Growth ETF has $64.43 billion in assets, Invesco QQQ has $142.01 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.

Bottom-Line

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds 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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