IVW isolates the growth half of the S&P 500 using a pure style methodology that creates zero overlap with value stocks. This isn't just 'tech-heavy S&P' — it's a systematic bet that expensive stocks with momentum will keep winning.
How It Works
The fund uses S&P's growth score based on three factors: sales growth, earnings change to price ratio, and momentum. Stocks are weighted by market cap times their growth score, meaning Microsoft with a high growth score gets more weight than its S&P 500 position. The index rebalances annually, creating a portfolio that's typically 35-40% tech versus the S&P's 30%.
Key Features
- Pure growth exposure with no value overlap, unlike blended growth funds that hedge their bets
- Rock-bottom 0.18% expense ratio makes it cheaper than 90% of active growth managers
- Momentum factor baked into methodology means it systematically buys winners and sells losers
Risks
- Growth stocks can crater 40-50% in recessions while value holds up better — see 2022's -30% drawdown
- Concentration risk with top 10 holdings often exceeding 50% of the fund versus 30% for SPY
- Annual rebalancing means you're often buying high and selling low as styles rotate
Who Should Own This
Best for investors with 10+ year horizons who believe innovation and disruption drive long-term returns. Works as a 20-30% satellite to core S&P 500 holdings for those wanting to tilt growth without going full QQQ. Not for anyone who gets queasy when P/E ratios hit 30+.