SPGP: The Best of Both Worlds🌟

In partnership with

Welcome to this Tuesday's deep dive into the Invesco S&P 500 GARP ETF (SPGP). which embodies one of the most compelling investment philosophies: Growth at a Reasonable Price (GARP). SPGP offers investors a systematic approach to capturing this time-tested strategy in a single, efficient vehicle.

Own a stake in simplifying relocation.

Every move begins with a choice, and we’ve built the platform to make those choices easier. From exploring communities to planning every detail, LookyLOO has you covered.

Show Me More

Read the Offering information carefully before investing. It contains details of the issuer’s business, risks, charges, expenses, and other information, which should be considered before investing. Obtain a Form C and Offering Memorandum at https://wefunder.com/lookyloo

What is SPGP?

The investment world often presents a seemingly binary choice between growth and value investing. Growth investors typically seek companies with high earnings growth potential, while value investors hunt for undervalued assets. Launched in 2011, SPGP targets companies that blend growth momentum with value discipline. Think of it as a hybrid strategy—too hot for strict value investors, too cold for pure growth chasers, but just right for those seeking sustainable returns without overpaying.

SPGP implements this philosophy through a rules-based methodology, tracking the S&P 500 Growth at a Reasonable Price (GARP) Index. This approach removes emotional bias from the investment process and provides investors with systematic exposure to companies that exhibit growth characteristics and reasonable valuations.

Investment Strategy📊

Incorporating SPGP into your ETF portfolio requires considering your overall investment strategy. Here are several implementation approaches:

• 🛰️Core-Satellite Strategy: SPGP can serve as a satellite position alongside a core S&P 500 ETF holding. This arrangement allows investors to maintain broad market exposure while tilting toward GARP characteristics.

• 📈Factor Diversification: SPGP simultaneously provides exposure to growth and value factors for investors building a factor-based portfolio. This dual exposure can complement pure growth ETFs and pure value ETFs, potentially reducing portfolio volatility while maintaining return potential.

• 📚Sector-Aware Integration: When adding SPGP to your portfolio, consider its sector weightings. The ETF's GARP methodology often results in sector concentrations different from the broad market. Investors can use these characteristics advantageously to adjust sector exposures or counterbalance with other holdings if seeking sector neutrality.

Example Allocation

• 40% S&P 500 ETF (SPY)

• 20% SPGP (GARP)

• 20% International Growth (IXUS)

• 20% Bonds (BND)

This blend leverages SPGP’s growth-value synergy while hedging against market volatility.

SPGP at a glance

ETF Issuer: Invesco

Inception: 2011-06-16

Asset Class: Equity

Underlying Index: S&P 500 Growth at a Reasonable Price Index

Geographical Focus: U.S.

Expense Ratio: 0.36% (as of last data point)

Dividend Yield: 1.34% (as of last data point)

Distribution Frequency: Quarterly

Historical Performance

Since its inception in 2011, the ETF has shown periods of both outperformance and underperformance relative to the broader S&P 500, highlighting its distinct investment approach.

During extreme market sentiment favouring either pure growth or pure value, SPGP may lag behind these single-factor approaches. However, over full market cycles, the GARP strategy has historically provided competitive returns:

• 📉better downside protection than pure growth strategies

• 📈better upside participation than pure value approaches

ETF Radar View

The radar chart below shows the general characteristics of the ETF:

Top 3 Reasons to Invest

1. Systematic GARP Implementation: The ETF provides a disciplined approach to implementing the GARP strategy, removing emotional bias from the stock selection process. The rules-based methodology ensures consistent application of GARP principles, regularly rebalancing to maintain exposure to companies meeting the strategy's criteria.

2. Risk-Adjusted Return Potential: By focusing on companies with both growth characteristics and reasonable valuations, SPGP aims to capture upside potential while maintaining a valuation discipline that may help limit downside risk. This balanced approach can lead to more stable long-term performance than pure growth or value strategies.

3. Portfolio Diversification Benefits: SPGP's unique approach to security selection often results in holdings and sector weights that differ significantly from traditional market-cap-weighted indexes. This differentiation can provide genuine diversification benefits when combined with core market exposure.

Top 3 Reasons Not to Invest

1. Strategy-Specific Risk: The GARP approach may underperform when markets strongly favour pure growth or pure value strategies. Investors should understand that SPGP's middle-ground approach might not capture the full upside of strong growth rallies or deep value recoveries.

2. Sector Concentration Risk: The ETF's methodology can lead to significant sector concentrations, which may result in heightened volatility or underperformance when specific sectors face challenges.

3. Rebalancing Impact: The regular rebalancing required to maintain the GARP strategy can lead to higher turnover than traditional market-cap-weighted ETFs. This turnover may result in additional trading costs and potential tax implications for investors in taxable accounts.

Growth and Value Collide for Smarter Investing💼

The Invesco S&P 500 GARP ETF combines growth and value investment strategies in a single ETF. It targets companies with strong growth potential and reasonable valuations, a combination that has historically performed well.

For investors looking to move beyond traditional investing, SPGP offers good diversification and improved risk-adjusted returns. Success with SPGP, however, requires an understanding of its unique features and careful integration into an overall investment strategy.

Our newsletters cover ETF implementation strategies, factor investing, and portfolio construction techniques. Join ETF UNO today to gain access to more comprehensive ETF analysis and connect with a community of thoughtful investors focused on building better portfolios through ETF investing.

DISCLAIMER: This article is for informational purposes only and should not be considered as investment advice. Always conduct your own research and consult with a financial advisor before making investment decisions.