Why Growth Factor is Performing for Smart Beta ETFs

Value stocks typically trade at cheaper prices relative to fundamental measures of value, such as earnings and the book value of assets. In contrast, growth stocks tend to run at higher valuations since investors expect the rapid growth in those company measures.

Cyclical stocks, like materials, industrials, energy and technology companies, are more economically sensitive and do well when the economy is improving. With the Federal Reserve set to hike rates, the rising rate environment would signal a better economic outlook. The healthcare and industrial sectors combine for over 27% of RPG’s roster.

Up 17% year-to-date, RPG hit a record high on Tuesday. Investors have added $206 million to RPG this year. RPG holds 114 stocks and none of the ETF’s holdings command weights of more than 3.16%, indicating the ETF is not vulnerable to single stock risk.

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