Designed to provide broad exposure to the Style Box - Mid Cap Growth category of the market, the Invesco S&P MidCap 400 Pure Growth ETF (
RFG Quick Quote RFG - Free Report) is a smart beta exchange traded fund launched on 03/01/2006. What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by Invesco. RFG has been able to amass assets over $321.47 million, making it one of the average sized ETFs in the Style Box - Mid Cap Growth. This particular fund, before fees and expenses, seeks to match the performance of the S&P MidCap 400 Pure Growth Index.
The S&P MidCap 400 Pure Growth Index measures the performance of securities that exhibit strong growth characteristics in the S&P MidCap 400 Index.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.35% for RFG, making it on par with most peer products in the space.
RFG's 12-month trailing dividend yield is 0.06%.
Sector Exposure and Top Holdings
ETFs offer 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.
RFG's heaviest allocation is in the Consumer Discretionary sector, which is about 23.60% of the portfolio. Its Healthcare and Information Technology round out the top three.
Looking at individual holdings, Digital Turbine Inc (
APPS Quick Quote APPS - Free Report) accounts for about 3.35% of total assets, followed by Repligen Corp ( RGEN Quick Quote RGEN - Free Report) and Rh ( RH Quick Quote RH - Free Report) .
Its top 10 holdings account for approximately 25.25% of RFG's total assets under management.
Performance and Risk
The ETF has lost about -10.51% so far this year and is down about -4.20% in the last one year (as of 02/28/2022). In the past 52-week period, it has traded between $191.35 and $245.79.
RFG has a beta of 1.19 and standard deviation of 28.03% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 83 holdings, it effectively diversifies company-specific risk.
Invesco S&P MidCap 400 Pure Growth ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Growth segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard MidCap Growth ETF (
VOT Quick Quote VOT - Free Report) tracks CRSP U.S. Mid Cap Growth Index and the iShares Russell MidCap Growth ETF ( IWP Quick Quote IWP - Free Report) tracks Russell MidCap Growth Index. Vanguard MidCap Growth ETF has $10.91 billion in assets, iShares Russell MidCap Growth ETF has $13.61 billion. VOT has an expense ratio of 0.07% and IWP charges 0.23%.
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 - Mid Cap Growth.
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.