SPGP’s 24.8% Sector Bet Only Requires One Thing to Beat The S&P 500

If you want exposure to growing companies without paying the premium valuations that often come with pure growth funds, Invesco S&P 500 GARP ETF (NYSEARCA:SPGP) offers a middle path. This fund targets businesses inside the S&P 500 that combine revenue and earnings expansion with reasonable price multiples. It’s designed for investors who believe growth matters, but not at any price.

The Portfolio Strategy: Growth Without Overpaying

SPGP uses a quantitative screen to identify companies with strong growth characteristics and attractive valuation ratios. The fund’s $2.4 billion in assets are deployed primarily into cyclical sectors that thrive during economic expansions. Financials lead the allocation at 24.8% because banks and financial services companies benefit from rising interest rates and increased lending activity. Consumer Discretionary and Industrials follow closely, capturing spending increases as consumer confidence improves and business investment accelerates.

The fund’s conviction shows in its concentrated bets. Royal Caribbean Group (NYSE:RCL) leads at 2.49% of assets, reflecting confidence in the travel recovery cycle as consumers prioritize experiences over goods. NVIDIA Corp (NASDAQ:NVDA | NVDA Price Prediction)’s 2.44% position captures the infrastructure buildout driving AI adoption across industries. These holdings illustrate the GARP philosophy: companies with strong growth trajectories trading at multiples the market considers reasonable given their expansion rates.

Performance That Rewards Patience

The past year tested the strategy’s cyclical positioning. SPGP’s 9.5% return trailed the broader S&P 500’s 14.4% as weakening consumer sentiment through 2024 and into 2025 hit discretionary spending and travel demand. The five-year picture shows similar dynamics, with SPGP’s 60% gain lagging SPDR S&P 500 ETF Trust (NYSEARCA:SPY)’s 77% return. The performance gap reveals the strategy’s core requirement: it needs economic tailwinds to outperform, making it a bet on expansion rather than an all-weather approach.

The Tradeoffs You Accept

This fund works best when the economy is expanding and consumers are spending. The fund avoids defensive sectors entirely, leaving no buffer when growth slows. The 0.65% dividend yield provides minimal income, and concentration risk exists with the top 25 holdings representing roughly 40% of assets.

SPGP fits investors who want growth exposure with some valuation discipline and can tolerate cyclical volatility, but it requires confidence in economic expansion to deliver on its premise.