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Is Invesco S&P MidCap 400 Pure Growth ETF (RFG) a Strong ETF Right Now?
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A smart beta exchange traded fund, the Invesco S&P MidCap 400 Pure Growth ETF (RFG - Free Report) debuted on 03/01/2006, and offers broad exposure to the Style Box - Mid Cap Growth category of the market.
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.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: 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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is sponsored by Invesco. It has amassed assets over $331.85 million, making it one of the average sized ETFs in the Style Box - Mid Cap Growth. This particular fund seeks to match the performance of the S&P MidCap 400 Pure Growth Index before fees and expenses.
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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for RFG are 0.35%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.56%.
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.
Representing 26.20% of the portfolio, the fund has heaviest allocation to the Consumer Discretionary sector; Industrials and Energy round out the top three.
Taking into account individual holdings, Cnx Resources Corp (CNX - Free Report) accounts for about 2.76% of the fund's total assets, followed by Duolingo Inc (DUOL - Free Report) and Ryan Specialty Holdings Inc (RYAN - Free Report) .
The top 10 holdings account for about 20.96% of total assets under management.
Performance and Risk
The ETF has added roughly 19.12% and was up about 28.70% so far this year and in the past one year (as of 10/08/2024), respectively. RFG has traded between $36.89 and $51.61 during this last 52-week period.
RFG has a beta of 1.14 and standard deviation of 23.77% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 89 holdings, it effectively diversifies company-specific risk.
Alternatives
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 Mid-Cap Growth ETF (VOT - Free Report) tracks CRSP U.S. Mid Cap Growth Index and the iShares Russell Mid-Cap Growth ETF (IWP - Free Report) tracks Russell MidCap Growth Index. Vanguard Mid-Cap Growth ETF has $14.12 billion in assets, iShares Russell Mid-Cap Growth ETF has $14.97 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.
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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Is Invesco S&P MidCap 400 Pure Growth ETF (RFG) a Strong ETF Right Now?
A smart beta exchange traded fund, the Invesco S&P MidCap 400 Pure Growth ETF (RFG - Free Report) debuted on 03/01/2006, and offers broad exposure to the Style Box - Mid Cap Growth category of the market.
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.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: 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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is sponsored by Invesco. It has amassed assets over $331.85 million, making it one of the average sized ETFs in the Style Box - Mid Cap Growth. This particular fund seeks to match the performance of the S&P MidCap 400 Pure Growth Index before fees and expenses.
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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for RFG are 0.35%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.56%.
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.
Representing 26.20% of the portfolio, the fund has heaviest allocation to the Consumer Discretionary sector; Industrials and Energy round out the top three.
Taking into account individual holdings, Cnx Resources Corp (CNX - Free Report) accounts for about 2.76% of the fund's total assets, followed by Duolingo Inc (DUOL - Free Report) and Ryan Specialty Holdings Inc (RYAN - Free Report) .
The top 10 holdings account for about 20.96% of total assets under management.
Performance and Risk
The ETF has added roughly 19.12% and was up about 28.70% so far this year and in the past one year (as of 10/08/2024), respectively. RFG has traded between $36.89 and $51.61 during this last 52-week period.
RFG has a beta of 1.14 and standard deviation of 23.77% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 89 holdings, it effectively diversifies company-specific risk.
Alternatives
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 Mid-Cap Growth ETF (VOT - Free Report) tracks CRSP U.S. Mid Cap Growth Index and the iShares Russell Mid-Cap Growth ETF (IWP - Free Report) tracks Russell MidCap Growth Index. Vanguard Mid-Cap Growth ETF has $14.12 billion in assets, iShares Russell Mid-Cap Growth ETF has $14.97 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.
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.