Why Are Investors Allocating to Invesco’s GARP ETF?

Invesco’s growth at a reasonable price (GARP) ETF has maintained strong investor interest since jumping into the limelight in 2022.

The Invesco S&P 500 GARP ETF (SPGP) has seen $727 million in net flows year-to-date as of March 24. The GARP ETF has taken in $1.9 billion over a one-year period. SPGP has $2.6 billion in assets under management.

SPGP saw $443 million in flows in February. The fund saw a whopping $1.2 billion in net flows last year, a sharp increase from 2021 when the fund saw $442 million in inflows, and a reversal from 2020, when the fund saw $173 million in outflows.

SPGP has seen a jump in research and flows in recent months as investors look for a fund offering both growth and value characteristics. The GARP ETF also tilts toward the small size factor because it weights securities by growth instead of market cap, it tends to be smaller down the market spectrum in terms of where performance is generated.

“While faster-growing companies have led the market in recent weeks, many advisors remain focused on those firms with blend of growth and value attributes,” Todd Rosenbluth, head of research at VettaFi, said. “Valuation will matter more as market uncertainty persists.”

While SPGP is lagging the S&P 500 in recent weeks, the fund has a track record of outperforming the index over all other periods. SPGP stands out for its ability to generate solid performance in both growth- and value-oriented environments, as it tilts toward both the growth and value factors — something highly unusual to see in one ETF.

SPGP is based on the S&P 500 Growth at a Reasonable Price Index. The index is composed of approximately 75 securities in the S&P 500 that have been identified as having the highest “growth scores” and “quality and value composite scores,” calculated pursuant to the index methodology, according to Invesco.

The top 10 holdings in SPGP as of March 30 include Facebook parent Meta Platforms (META), NRG Energy Inc. (NRG), Qorvo Inc. (QRVO), D.R. Horton Inc. (DHI), West Pharmaceutical Services Inc. (WST), Teradyne Inc. (TER), Regeneron Pharmaceuticals Inc. (REGN), Hologic Inc. (HOLX), Lam Research Corporation (LRCX), and Moderna Inc. (MRNA).

The fund charges 36 basis points.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.