The Invesco S&P 500 GARP ETF (SPGP) incorporates quality and value attributes, while still historically providing attractive returns that outperform the S&P 500.
SPGP saw a surge in research and flows last year as investors searched for quality and value. While many funds prioritizing quality and value have underperformed over a longer period, SPGP has maintained notable outperformance over the S&P 500 over one-, three-, five-, and 10-year periods.
The fund, which has $2 billion in assets, gained significant attention in 2022, hauling in $1.2 billion in net inflows — taking in $280 million in December alone. This is a significant jump from 2021, when the fund saw $442 million in inflows, and 2020, when the fund saw $173 million in outflows. SPGP outperformed the S&P 500 by over 428 basis points on a total return basis last year.
“SPGP provides a strong alternative to growth investing because it takes quality and value factor into account as well,” Todd Rosenbluth, head of research at VettaFi, said. “In 2022 and to start 2023 investors are more value conscious and gravitating to stocks that have strong fundamentals.”
The fund is based on the S&P 500 Growth at a Reasonable Price Index, which 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. The index constituents are weighted based on their growth scores.
Metrics such as total debt-to-book value, return on equity, and earnings-to-price ratio are combined with traditional sales and earnings growth ones to build SPGP, Rosenbluth wrote in December.
Over a one-year period, SPGP has declined 9.6% compared to the S&P 500’s decline of 15.4%, each on a total return basis, as of January 9, according to YCharts. Over a three-year period, SPGP is up 37.1% while the S&P 500 has increased 24.8%.
SPGP is Invesco’s fourth best-performing ETF over a five-year period, trailing the Invesco Solar ETF (TAN), the Invesco DWA Technology Momentum ETF (PTF), and the Invesco Dynamic Semiconductors ETF (PSI). In the last five years, SPGP has returned 88.3% while the S&P 500 has increased 54.5%.
SPGP is notably still outperforming over a 10-year period, up 309.6% compared to the S&P 500’s increase of 223.1 during the same period.
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