Many exchange-traded funds (ETFs) that focus on growth often include many top growth stocks, but they’re also expensive investments to own, especially in tech, where investors are often willing to pay excessively high multiples for fast-growing businesses. But one ETF that uses valuation and growth when picking its holdings is the Invesco S&P 500 Pure Growth ETF (NYSE Arca:RPG).
The fund has good diversification across many sectors, with industrials leading the way at 23% of all holdings, consumer discretionary making up 22%, and tech stocks coming in the third spot, representing just over 18% of the total portfolio.
The fund averages a price-to-earnings multiple of 25, and that falls to 21 based on forward earnings. There are around 90 stocks in the fund in total, and the largest one, Texas Pacific Land (NYSE:TPL), makes up just over 2% of the ETF. Other big names include Royal Caribbean Cruises (NYSE:RCL) and Palantir Technologies (NASDAQ:PLTR). This balanced mix is important for investors who value diversification as it means you have limited exposure to any single stock. With a good mix of growth stocks across many sectors, investors can have a more balanced investment to hang on to over the long haul.
The ETF charges an expense ratio of 0.35%, which is modest in relation to other funds. Limiting fees is important when investing for the long haul to ensure that they aren’t taking out a big chunk of your overall returns.
Over the past five years, the ETF has generated total returns (including dividends) of around 100%. While it has been struggling this year, it can be a good option for investors who want growth but who also want to keep their risk low.