iShares S&P 500 Growth Index (ETF) (IVW)

iShares SandP 500 Growth Index consists of companies that exhibit the strongest growth characteristics. Representing approximately 49% of the market capitalization of the SandP 500 its multifactor approach based on seven parameters to determine the growth status has helped it keep cost low at 0.18%. Though the past returns of the fund hasn’t been impressive it has posted returns of 10.81% in the previous year.


Information technology accounts for one-fifth of the funds holding supported by seasonal IT spending. The industry is faced with pricing pressures but Internet related operations remain bright spots to cash on. Healthcare accounts for 17% with the rising aging population supporting the managed healthcare. Of late pharmaceutical companies have paid high dividends apart from enjoying the widest margins and would benefit from the rise in approval of new molecular entities in 2007. A second look into the individual constituents of the financial sector reveals that it has less exposure in the traditional banking companies whose prospects are tied to the spread. Increased capital market activities and volatilities would favor the investment banking and brokerage houses.


Exxon Mobil has the highest weightage in the fund forming part of the energy sector that has around 13.66%. Moreover the decision to keep oil supply at current levels after the recently concluded OPEC conference comes as good news for the oil sector. Industrials, Materials and Utilities totally account for around 12% of the holding. Issues of national security leading to increasing defense expenditure and increased capital spending on materials equipments would help the industrial conglomerates like 3M and General Electric. Consumer staples and consumer discretionary account for 14% and 11.5% of the funds holding.


Diversification of the fund looks good and has about 55% allocation to the mega cap stocks. Moreover its price to earnings multiple and other ratios look attractive when compared to its peers and would be a good pick for those seeking a large exposure at a decent price.