The Case For The S&P 500 GARP Index

The S&P 500® GARP (Growth at a Reasonable Price) Index just had its second anniversary since its launch in February 2019. During the latter half of this time, the world experienced the worst global pandemic in a century. Equities entered a swift V-shaped bear market and rebound.

In this blog, we review the index’s performance, characteristics, and relevant single-factor strategies.


During the past one-year period, the S&P 500 GARP Index outperformed the S&P 500 and other selected single-factor indices by a wide margin. For the overall post-launch two-year period, the S&P 500 GARP Index again outperformed the S&P 500 and other selected single-factor indices, with the exception of the S&P 500 Pure Growth.

Rebasing the S&P 500 GARP Index, its associated single factor indices, and the S&P 500 to 100 on Feb. 28, 2019, the S&P 500 GARP Index, S&P 500 Quality IndexS&P 500 Enhanced Value Index, and S&P 500 Pure Growth reached 142.3, 141.9, 115.5, and 148.1, respectively, on Feb. 26, 2021, while the S&P 500 reached 142.0 (see Exhibit 1).

The outperformance of the S&P 500 GARP Index mainly came from the most recent 12-month period. During this time, the S&P 500 GARP Index outperformed the S&P 500 and selected single-factor indices, as shown in Exhibit 2.

Such results are not surprising given recent market development. First, with the vaccination rollout and decrease in new COVID-19 cases, investors expect real economic recovery on the horizon. Second, as yields of longer-term U.S. government bonds tick up, investors may start to rotate out of expensive growth stocks and favor value companies.

Strategy Characteristics

The S&P 500 GARP Index is designed to track growth companies with relatively high quality and good valuation. It aims to balance pure growth and pure valuation exposures, as the former tends to target high-growth, yet expensive stocks, while the latter may take a longer time to pay off.1

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