Making its debut on 03/01/2006, smart beta exchange traded fund Invesco S&P MidCap 400 Pure Growth ETF (RFG) provides investors broad exposure to the Style Box - Mid Cap Growth category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by Invesco, and has been able to amass over $345.23 million, which makes it one of the average sized ETFs in the Style Box - Mid Cap Growth. Before fees and expenses, this particular fund seeks to match the performance of the S&P MidCap 400 Pure Growth Index.
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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for RFG are 0.35%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.08%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
For RFG, it has heaviest allocation in the Industrials sector --about 27.7% of the portfolio --while Healthcare and Information Technology round out the top three.
Taking into account individual holdings, Arrowhead Pharmaceuticals Inc (ARWR) accounts for about 2.43% of the fund's total assets, followed by Halozyme Therapeutics Inc (HALO) and Carpenter Technology Corp (CRS).
Its top 10 holdings account for approximately 20.63% of RFG's total assets under management.
Performance and Risk
So far this year, RFG has added about 16.08%, and it's up approximately 18.85% in the last one year (as of 09/08/2026). During this past 52-week period, the fund has traded between $49.50 and $64.63.
The ETF has a beta of 1.12 and standard deviation of 20.39% for the trailing three-year period, making it a medium risk choice in the space. With about 102 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 Morningstar 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 Morningstar Mid-Cap Growth ETF has $19.46 billion in assets, iShares Russell Mid-Cap Growth ETF has $19.65 billion. VOT has an expense ratio of 0.05% and IWP changes 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
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Invesco S&P MidCap 400 Pure Growth ETF (RFG): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).