RPG: Pure Momentum, Not Pure Growth, Is Driving This Year's Exceptional Gains

Invesco S&P 500 Pure Growth ETF is comprised of S&P 500 Index stocks that exhibit the strongest growth characteristics. It has a 0.35% expense ratio, $2.08 billion in assets, and is up 21.64% YTD. S&P's definition of "pure growth" is unique, as its scoring system incorporates twelve-month price momentum. In fact, my fundamental analysis shows that's the dominant factor today. Stocks like Sandisk and Micron Technology lead RPG and could continue to propel it to even bigger gains this year, even with some moderate valuation compression. However, downside risk is substantial. Since RPG functions like a "pure momentum" ETF today, its once-a-year membership reviews are insufficient. I rate RPG a solid "hold" today for its high next-year EPS growth rate, but I dislike the strategy, and encourage long-term investors to seek other high-growth alternatives.