Late last spring, a well-known index provider, Russell Investments, forayed directly into the exchange traded fund industry as an issuer and currently has 24 different strategies available to investors in ETF form. Russell is known by most as being the index provider for several popular funds that are run by other issuers, such as IWM (iShares Russell 2000) or IWO (iShares Russell 2000 Growth).
Russell’s involvement in the space took a different direction last year, and many of the strategies that they offer currently are not simply beta approaches, but are quantitatively geared in order to produce some benefit against the benchmarks (either alpha or lower volatility, and in some cases a combination of both). [How Russell’s New ETFs are Different]
GRPC (Russell Growth At A Reasonable Price) is one fund that caught our attention simply because many investment managers whom are running portfolios by selecting individual stocks, are making their decisions on a GARP (or Growth at Reasonable Price) basis.
The focus of such an approach is to isolate companies that appear to be “cheap” compared to their long term forecast earnings growth relative to their P/E ratios. GRPC funnels the Russell 1000 Index down to companies that fit this criteria and currently owns 233 equities that are in this index, ranking them according to how they score according to the fund’s GARP guidelines. [Russell Launches Small-Cap ETFs]
Current top holdings of GRPC are XOM (5.85%), IBM (3.16%), CVX (3.05%), MSFT (2.75%), and GE (2.72%). Although the live performance of GRPC is limited, the results thus far are encouraging as GRPC is down 2.27% since late May (the fund’s inception) versus IWB (iShares Russell 1000) which has lost 4.21%. It should also be noted that GRPC does not trade very heavy volumes currently as it is still relatively new to the marketplace, and the average daily trading volume is about 18,000 shares. [New Factor-Based ETFs from Russell]
This said, due to the nature of the underlying holdings, and its rather large cap weighting slant, the fund can be traded efficiently in size when using the proper techniques and contacting desks that specialize in ETF liquidity and execution.
Russell Growth At A Reasonable Price
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