Last week we highlighted institutional rotation into several Growth and Value ETF equity offerings (IVE, IVW, IJK, IJJ, IJS, IJT) that are based around well- known indexes such as the S&P 400, S&P 500, and S&P 600, and we continue to see similar activity heading into the final trading days of the year.
One particular fund jumps out to us most recently, RPG (Guggenheim S&P 500 Pure Growth, Expense Ratio 0.35%), as this ETF has also been a recipient of creation driven inflows to the tune of more than $300 million, bringing the fund’s asset base to about $900 million.
RPG and its sister ETF RPV (Guggenheim S&P 500 Pure Value, Expense Ratio 0.35%) are not nearly as well known as the aforementioned iShares Growth and Value equity based ETFs in terms of assets under management or trading volume, but the funds have built some momentum and staying power in the space due to their unique design.
RPG is based on the S&P 500/Citigroup Pure Growth Index which differs from the index benchmark of say IVW (iShares S&P 500 Growth, Expense Ratio 0.18%) which is the S&P 500/Citigroup
Growth Index (note the absence of the word “pure”).
The same difference exists between RPV and IVE (iShares S&P 500 Value, Expense Ratio 0.19%). Since its inception in 2006, RPG has posted impressive returns head to head against its peers.
Unlike other offerings that adopt a market capitalization weighted approach to the underlying Growth or Value index, the Guggenheim “Pure” products are weighted by “style scores” which are re-balanced annually (whereas market cap never re-balances). A quick examination of top holdings of RPG show some notable differences versus top holdings of say IVW or SPY with HBAN (2.24%), TRIP (1.92%), NFLX (1.91%), CELG (1.90%), and SWY (1.86%) making up the top five, giving the fund a lesser focus on “mega-caps” than its peers.