Overall, iShares S&P 500 Growth Index (NYSEARCA:IVW) is home to 285 stocks and the value tilt is heavy as health care and consumer staples names account for nearly 30 percent of the fund’s weight.
“Despite its growth bias, iShares S&P 500 Growth Index (NYSEARCA:IVW) has exposure to all 10 GICS sectors, with the largest representation in information technology (27% of assets as of October 2012, vs. 19% in the S&P 500 Index), health care (16%, vs. 12%) and consumer staples (14%, vs. 11%). In contrast, financials, telecom services and utilities sectors are underrepresented in this ETF compared to the parent benchmark,” said S&P Capital IQ.
In addition to its significant exposure to the technology sector, iShares S&P 500 Growth Index (NYSEARCA:IVW) does sport valuations that underscore the ETF’s growth bias. The ETF has a price-to-earnings ratio of 20.31 and a price-to-book ratio of 5.11, according to iShares data. Conversely, the iShares S&P 500 Index (NYSEARCA:IVV) has a P/E ratio of 19.16 and price-to-book ratio of 3.8. In IVW’s favor is a beta of 0.95 against the S&P 500, a statistic that implies the ETF can help investors temper some of the volatility that often accompanies growth stocks.
Investors looking for an alternative to iShares S&P 500 Growth Index (NYSEARCA:IVW) should evaluate the Vanguard Growth (NYSEARCA:VUG), which is home to 457 stocks and expense ratio of 0.1 percent. Vanguard Growth (NYSEARCA:VUG) and IVW share many of the same holdings, though VUG’s top-10 constituents represent 28.2 percent of that ETF’s weight compared to IVW’s top-10 lineup accounting for 29.15 percent of that ETF’s weight.
Vanguard Growth (NYSEARCA:VUG)’s beta is slightly higher than IVW’s and that may be one reason why the ETF has gained 17.2 percent this year compared to nearly 14.6 percent for iShares S&P 500 Growth Index (NYSEARCA:IVW).
This article was originally written by The ETF Professor, and posted on Benzinga.