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Is Invesco FTSE RAFI US 1500 SmallMid ETF (PRFZ) a Strong ETF Right Now?
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Launched on 09/20/2006, the Invesco FTSE RAFI US 1500 SmallMid ETF (PRFZ - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Small Cap Blend category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
Managed by Invesco, PRFZ has amassed assets over $1.97 billion, making it one of the larger ETFs in the Style Box - Small Cap Blend. PRFZ, before fees and expenses, seeks to match the performance of the FTSE RAFI US 1500 Small-Mid Index.
The FTSE RAFI US 1500 Small-Mid Index is comprised of approximately 1,500 U.S. stocks. The FTSE US 1500 Small-Mid Index is designed to track the performance of small and medium-sized U.S. equity stocks selected based on the following four fundamental measures of firm size: book value, income, cash flow and dividends.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.39%, making it on par with most peer products in the space.
PRFZ's 12-month trailing dividend yield is 1.25%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
Representing 20.50% of the portfolio, the fund has heaviest allocation to the Financials sector; Industrials and Information Technology round out the top three.
Taking into account individual holdings, Invesco Government & Agency Portfolio (AGPXX) accounts for about 0.38% of the fund's total assets, followed by Scorpio Tankers Inc (STNG - Free Report) and Consol Energy Inc (CEIX - Free Report) .
Its top 10 holdings account for approximately 3.01% of PRFZ's total assets under management.
Performance and Risk
The ETF has lost about -16.18% and is down about -13.02% so far this year and in the past one year (as of 09/02/2022), respectively. PRFZ has traded between $149.12 and $201.01 during this last 52-week period.
The fund has a beta of 1.16 and standard deviation of 29.59% for the trailing three-year period, which makes PRFZ a medium risk choice in this particular space. With about 1482 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco FTSE RAFI US 1500 SmallMid ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 2000 ETF (IWM - Free Report) tracks Russell 2000 Index and the iShares Core S&P SmallCap ETF (IJR - Free Report) tracks S&P SmallCap 600 Index. IShares Russell 2000 ETF has $52.16 billion in assets, iShares Core S&P SmallCap ETF has $65.12 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Small Cap Blend.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Is Invesco FTSE RAFI US 1500 SmallMid ETF (PRFZ) a Strong ETF Right Now?
Launched on 09/20/2006, the Invesco FTSE RAFI US 1500 SmallMid ETF (PRFZ - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Small Cap Blend category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
Managed by Invesco, PRFZ has amassed assets over $1.97 billion, making it one of the larger ETFs in the Style Box - Small Cap Blend. PRFZ, before fees and expenses, seeks to match the performance of the FTSE RAFI US 1500 Small-Mid Index.
The FTSE RAFI US 1500 Small-Mid Index is comprised of approximately 1,500 U.S. stocks. The FTSE US 1500 Small-Mid Index is designed to track the performance of small and medium-sized U.S. equity stocks selected based on the following four fundamental measures of firm size: book value, income, cash flow and dividends.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.39%, making it on par with most peer products in the space.
PRFZ's 12-month trailing dividend yield is 1.25%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
Representing 20.50% of the portfolio, the fund has heaviest allocation to the Financials sector; Industrials and Information Technology round out the top three.
Taking into account individual holdings, Invesco Government & Agency Portfolio (AGPXX) accounts for about 0.38% of the fund's total assets, followed by Scorpio Tankers Inc (STNG - Free Report) and Consol Energy Inc (CEIX - Free Report) .
Its top 10 holdings account for approximately 3.01% of PRFZ's total assets under management.
Performance and Risk
The ETF has lost about -16.18% and is down about -13.02% so far this year and in the past one year (as of 09/02/2022), respectively. PRFZ has traded between $149.12 and $201.01 during this last 52-week period.
The fund has a beta of 1.16 and standard deviation of 29.59% for the trailing three-year period, which makes PRFZ a medium risk choice in this particular space. With about 1482 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco FTSE RAFI US 1500 SmallMid ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 2000 ETF (IWM - Free Report) tracks Russell 2000 Index and the iShares Core S&P SmallCap ETF (IJR - Free Report) tracks S&P SmallCap 600 Index. IShares Russell 2000 ETF has $52.16 billion in assets, iShares Core S&P SmallCap ETF has $65.12 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Small Cap Blend.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.