Designed to provide broad exposure to the Large Cap Growth segment of the US equity market, the Invesco S&P 500 GARP ETF (SPGP Quick QuoteSPGP - Free Report) is a passively managed exchange traded fund launched on 06/17/2011.

The fund is sponsored by Invesco. It has amassed assets over $4.31 billion, making it one of the larger 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. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.

While growth stocks do boast higher than average sales and earnings growth rates, and they are expected to grow faster than the wider market, investors should note these kinds of stocks have higher valuations. Also, growth stocks are a type of equity that carries more risk compared to others. When you consider growth versus value, growth stocks are usually the clear winner in strong bull markets but tend to fall flat in nearly all other environments.

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 0.36%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.29%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Energy sector--about 20.50% of the portfolio. Information Technology and Industrials round out the top three.

Looking at individual holdings, United Airlines Holdings Inc (UAL Quick QuoteUAL - Free Report) accounts for about 2.92% of total assets, followed by Nvidia Corp (NVDA Quick QuoteNVDA - Free Report) and Delta Air Lines Inc (DAL Quick QuoteDAL - Free Report) .

The top 10 holdings account for about 21.65% of total assets under management.

Performance and Risk

SPGP seeks to match the performance of the S&P 500 GROWTH AT A REASONABLE PRICE IDX before fees and expenses. The S&P 500 Growth at a Reasonable Price Index is composed of securities with strong growth characteristics selected from the Russell Top 200 Index.

The ETF has added about 15.52% so far this year and it's up approximately 20.49% in the last one year (as of 12/04/2024). In the past 52-week period, it has traded between $92.45 and $112.52.

The ETF has a beta of 1.08 and standard deviation of 18.50% for the trailing three-year period. With about 77 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco S&P 500 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, SPGP 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 Quick QuoteVUG - Free Report) and the Invesco QQQ (QQQ Quick QuoteQQQ - Free Report) track a similar index. While Vanguard Growth ETF has $153.51 billion in assets, Invesco QQQ has $320.61 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.

Bottom-Line

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they 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.