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Should Invesco S&P MidCap 400 GARP ETF (GRPM) Be on Your Investing Radar?

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Designed to provide broad exposure to the Mid Cap Blend segment of the US equity market, the Invesco S&P MidCap 400 GARP ETF (GRPM - Free Report) is a passively managed exchange traded fund launched on 12/03/2010.

The fund is sponsored by Invesco. It has amassed assets over $204.26 million, making it one of the average sized ETFs attempting to match the Mid Cap Blend segment of the US equity market.

Why Mid Cap Blend

Mid cap companies have market capitalization between $2 billion and $10 billion. They usually have higher growth prospects than large cap companies and are less volatile than small cap companies. Thus, companies that fall under this category provide a stable and growth-heavy investment.

Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.

Costs

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.

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 1.12%.

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 Consumer Discretionary sector--about 26.40% of the portfolio. Industrials and Energy round out the top three.

Looking at individual holdings, Matador Resources Co (MTDR - Free Report) accounts for about 3.26% of total assets, followed by Chord Energy Corp (CHRD - Free Report) and Murphy Usa Inc (MUSA - Free Report) .

The top 10 holdings account for about 25.43% of total assets under management.

Performance and Risk

GRPM seeks to match the performance of the S&P MIDCAP 400 GARP INDEX before fees and expenses. The S&P MidCap 400 GARP Index seeks to track companies with consistent fundamental growth, reasonable valuation, solid financial strength, and strong earning power.

The ETF has lost about -6.09% so far this year and was up about 0% in the last one year (as of 10/19/2023). In the past 52-week period, it has traded between $84.55 and $93.91.

The ETF has a beta of 1.21. With about 59 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco S&P MidCap 400 GARP 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, GRPM is a sufficient option for those seeking exposure to the Style Box - Mid Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.

The Vanguard Mid-Cap ETF (VO - Free Report) and the iShares Core S&P Mid-Cap ETF (IJH - Free Report) track a similar index. While Vanguard Mid-Cap ETF has $51.68 billion in assets, iShares Core S&P Mid-Cap ETF has $69.45 billion. VO has an expense ratio of 0.04% and IJH charges 0.05%.

Bottom-Line

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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