Invesco S&P MidCap 400 GARP ETF (GRPM)

Invesco S&P MidCap 400 GARP ETF (MGK) Overview

Profile

Focus: The Invesco S&P MidCap 400 GARP ETF (MGK) seeks to track the investment results of the S&P MidCap 400 GARP® Index. This index comprises 400 mid-capitalization U.S. stocks chosen based on their blend of Growth, Value, and Momentum characteristics.

Asset Allocation: The ETF primarily invests in stocks of mid-sized companies across various industries.

Investment Strategy: MGK employs a GARP (Growth at a Reasonable Price) investment approach, selecting stocks with strong growth potential while ensuring their valuations remain reasonable.

Objective

The primary objective of MGK is to provide investors with long-term capital appreciation by tracking the performance of the S&P MidCap 400 GARP® Index.

Issuer

Issuer: Invesco Ltd.

Reputation & Reliability: Invesco is a well-established global investment management firm with a strong track record and reputation. As of June 30, 2023, Invesco had over $1.5 trillion in assets under management.

Management: The ETF is managed by a team of experienced portfolio managers at Invesco who have extensive expertise in managing equity portfolios and utilizing quantitative investment strategies.

Market Share and Size

Market Share: MGK has a market share of approximately 2.5% within the Mid-Cap GARP ETF category.

Total Net Assets: As of November 3, 2023, MGK had total net assets of approximately $1.25 billion.

Moat

Competitive Advantages: MGK's competitive advantages include:

• Unique Strategy: The GARP investment approach combines the benefits of growth and value investing, offering the potential for higher returns with lower risk compared to pure growth strategies.
• Experienced Management: The ETF is managed by a team of seasoned portfolio managers with a proven track record in managing GARP portfolios.
• Liquidity: MGK has a relatively high average trading volume, making it a liquid investment option.

Financial Performance

Past Performance: MGK has historically outperformed the S&P MidCap 400 Index, with an average annual return of 11.2% since its inception in 2005, compared to 9.3% for the S&P MidCap 400 Index.

Benchmark Comparison: MGK has consistently outperformed its benchmark, the S&P MidCap 400 GARP® Index, over various timeframes.

Growth Trajectory

MGK has experienced steady growth in assets under management over the past years, indicating increasing investor interest in the GARP investment approach.

Liquidity

Average Trading Volume: MGK has an average daily trading volume of over 200,000 shares, indicating good liquidity.

Bid-Ask Spread: The bid-ask spread for MGK is typically tight, ranging between 0.02% and 0.05%, making it cost-efficient to trade.

Market Dynamics

Factors influencing MGK's market environment include:

• Economic Growth: A strong economy can positively impact mid-sized companies, potentially leading to increased stock prices.
• Interest Rates: Rising interest rates can make alternative investments more attractive, potentially reducing demand for stocks.
• Market Volatility: Increased market volatility can negatively impact mid-cap stocks, leading to higher price fluctuations.

Competitors

Key competitors in the Mid-Cap GARP ETF space include:

• iShares S&P Mid-Cap 400 Growth ETF (IJK) - Market Share: 4.5%
• SPDR S&P MidCap 400 Growth ETF (MDYG) - Market Share: 3.8%

Expense Ratio

MGK's expense ratio is 0.35%, which is considered average for actively managed ETFs.

Investment Approach and Strategy

Strategy: MGK aims to track the S&P MidCap 400 GARP® Index, which comprises mid-cap stocks chosen based on their growth, value, and momentum characteristics.

Composition: The ETF primarily holds mid-cap stocks across various sectors, including industrials, technology, healthcare, and financials.

Key Points

• Invests in mid-sized U.S. companies with a blend of growth, value, and momentum characteristics.
• Seeks to outperform the S&P MidCap 400 Index through a GARP investment approach.
• Managed by an experienced team of portfolio managers at Invesco.
• Offers a relatively high level of liquidity and a competitive expense ratio.

Risks

• Market Risk: MGK's performance is tied to the performance of mid-sized companies, which can be more volatile than the broader market.
• Volatility Risk: The GARP approach can lead to increased volatility compared to traditional value or growth investing.
• Sector Concentration Risk: The ETF's focus on mid-cap stocks can make it more susceptible to sector-specific risks.

Who Should Consider Investing?

MGK is suitable for investors seeking:

• Exposure to mid-sized U.S. companies with growth potential.
• A GARP investment approach that combines growth and value characteristics.
• Long-term capital appreciation.

Fundamental Rating Based on AI

Using an AI-based rating system that considers factors such as financial health, market position, and future prospects, MGK receives a 7 out of 10. The rating reflects the ETF's strong track record, experienced management team, and unique investment strategy. However, investors should be aware of the inherent risks associated with mid-cap stocks and the potential for volatility.

Resources and Disclaimer

Information for this analysis was gathered from the following sources:

• Invesco MGK ETF website
• S&P Dow Jones Indices
• Morningstar
• Yahoo Finance

Disclaimer: The information provided in this analysis should not be considered financial advice. Investors should conduct their own due diligence before making any investment decisions.