The Invesco S&P MidCap 400 Pure Growth ETF (RFG) was launched on 03/01/2006, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Mid Cap Growth category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by Invesco. RFG has been able to amass assets over $263.19 million, making it one of the average sized ETFs in the Style Box - Mid Cap Growth. RFG seeks to match the performance of the S&P MidCap 400 Pure Growth Index before fees and expenses.
The S&P MidCap 400 Pure Growth Index measures the performance of securities that exhibit strong growth characteristics in the S&P MidCap 400 Index.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.35%.
It has a 12-month trailing dividend yield of 0.35%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
This ETF has heaviest allocation in the Industrials sector - about 26.10% of the portfolio. Consumer Discretionary and Healthcare round out the top three.
Looking at individual holdings, Carpenter Technology Corp (CRS) accounts for about 2.36% of total assets, followed by Roivant Sciences Ltd (ROIV) and Tko Group Holdings Inc (TKO).
RFG's top 10 holdings account for about 19% of its total assets under management.
Performance and Risk
The ETF has lost about -12.98% and is down about -14.31% so far this year and in the past one year (as of 04/14/2025), respectively. RFG has traded between $39.08 and $53.39 during this last 52-week period.
RFG has a beta of 1.14 and standard deviation of 23.99% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 93 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco S&P MidCap 400 Pure Growth ETF is an excellent option for investors seeking to outperform the Style Box - Mid Cap Growth segment of the market. There are other ETFs in the space which investors could consider as well.
Vanguard Mid-Cap Growth ETF (VOT) tracks CRSP U.S. Mid Cap Growth Index and the iShares Russell Mid-Cap Growth ETF (IWP) tracks Russell MidCap Growth Index. Vanguard Mid-Cap Growth ETF has $14.17 billion in assets, iShares Russell Mid-Cap Growth ETF has $15.96 billion. VOT has an expense ratio of 0.07% and IWP charges 0.23%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Mid Cap Growth.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Invesco S&P MidCap 400 Pure Growth ETF (RFG): ETF Research Reports Carpenter Technology Corporation (CRS): Free Stock Analysis Report iShares Russell Mid-Cap Growth ETF (IWP): ETF Research Reports Vanguard Mid-Cap Growth ETF (VOT): ETF Research Reports Roivant Sciences Ltd. (ROIV): Free Stock Analysis Report TKO Group Holdings, Inc. (TKO): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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