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Is Invesco FTSE RAFI US 1500 SmallMid ETF (PRFZ) a Strong ETF Right Now?
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The Invesco FTSE RAFI US 1500 SmallMid ETF (PRFZ - Free Report) made its debut on 09/20/2006, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Small Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by Invesco, and has been able to amass over $1.92 billion, which makes it one of the larger ETFs in the Style Box - Small Cap Blend. This particular fund seeks to match the performance of the FTSE RAFI US 1500 Small-Mid Index before fees and expenses.
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 PRFZ are 0.39%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.33%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Industrials sector - about 18.40% of the portfolio. Financials and Information Technology round out the top three.
When you look at individual holdings, Consol Energy Inc (CEIX - Free Report) accounts for about 0.43% of the fund's total assets, followed by Scorpio Tankers Inc (STNG - Free Report) and Tenneco Inc .
Its top 10 holdings account for approximately 2.82% of PRFZ's total assets under management.
Performance and Risk
Year-to-date, the Invesco FTSE RAFI US 1500 SmallMid ETF has gained about 0% so far, and is down about -16.27% over the last 12 months (as of 01/03/2023). PRFZ has traded between $145.71 and $194.71 in this past 52-week period.
The ETF has a beta of 1.16 and standard deviation of 30.56% for the trailing three-year period, making it a medium risk choice in the space. With about 1468 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 $52.28 billion in assets, iShares Core S&P SmallCap ETF has $64.88 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?
The Invesco FTSE RAFI US 1500 SmallMid ETF (PRFZ - Free Report) made its debut on 09/20/2006, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Small Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by Invesco, and has been able to amass over $1.92 billion, which makes it one of the larger ETFs in the Style Box - Small Cap Blend. This particular fund seeks to match the performance of the FTSE RAFI US 1500 Small-Mid Index before fees and expenses.
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 PRFZ are 0.39%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.33%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Industrials sector - about 18.40% of the portfolio. Financials and Information Technology round out the top three.
When you look at individual holdings, Consol Energy Inc (CEIX - Free Report) accounts for about 0.43% of the fund's total assets, followed by Scorpio Tankers Inc (STNG - Free Report) and Tenneco Inc .
Its top 10 holdings account for approximately 2.82% of PRFZ's total assets under management.
Performance and Risk
Year-to-date, the Invesco FTSE RAFI US 1500 SmallMid ETF has gained about 0% so far, and is down about -16.27% over the last 12 months (as of 01/03/2023). PRFZ has traded between $145.71 and $194.71 in this past 52-week period.
The ETF has a beta of 1.16 and standard deviation of 30.56% for the trailing three-year period, making it a medium risk choice in the space. With about 1468 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 $52.28 billion in assets, iShares Core S&P SmallCap ETF has $64.88 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.