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Is Invesco FTSE RAFI US 1000 ETF (PRF) a Strong ETF Right Now?
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Making its debut on 12/19/2005, smart beta exchange traded fund Invesco FTSE RAFI US 1000 ETF (PRF - Free Report) provides investors broad exposure to the Style Box - Large Cap Value 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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
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
The fund is managed by Invesco, and has been able to amass over $6.58 billion, which makes it one of the larger ETFs in the Style Box - Large Cap Value. PRF seeks to match the performance of the FTSE RAFI US 1000 Index before fees and expenses.
The FTSE RAFI US 1000 Index is designed to track the performance of the largest U.S. equities, selected based on the following four fundamental measures of firm size: book value, income, sales and dividends. U.S. equities are then weighted by each of these four fundamental measures.An overall weight is calculated for each firm by equally-weighting each fundamental measure.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.39% for this ETF, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.81%.
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.
PRF's heaviest allocation is in the Financials sector, which is about 20.50% of the portfolio. Its Information Technology and Healthcare round out the top three.
Looking at individual holdings, Berkshire Hathaway Inc (BRK/B) accounts for about 2.78% of total assets, followed by Apple Inc (AAPL - Free Report) and Microsoft Corp (MSFT - Free Report) .
Its top 10 holdings account for approximately 19% of PRF's total assets under management.
Performance and Risk
Year-to-date, the Invesco FTSE RAFI US 1000 ETF has gained about 1.70% so far, and was up about 11.67% over the last 12 months (as of 02/07/2024). PRF has traded between $29.89 and $35.95 in this past 52-week period.
PRF has a beta of 1 and standard deviation of 16.05% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 1008 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco FTSE RAFI US 1000 ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
Schwab U.S. Dividend Equity ETF (SCHD - Free Report) tracks Dow Jones U.S. Dividend 100 Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $52.58 billion in assets, Vanguard Value ETF has $107.50 billion. SCHD has an expense ratio of 0.06% and VTV charges 0.04%.
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 - Large Cap Value.
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 1000 ETF (PRF) a Strong ETF Right Now?
Making its debut on 12/19/2005, smart beta exchange traded fund Invesco FTSE RAFI US 1000 ETF (PRF - Free Report) provides investors broad exposure to the Style Box - Large Cap Value 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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
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
The fund is managed by Invesco, and has been able to amass over $6.58 billion, which makes it one of the larger ETFs in the Style Box - Large Cap Value. PRF seeks to match the performance of the FTSE RAFI US 1000 Index before fees and expenses.
The FTSE RAFI US 1000 Index is designed to track the performance of the largest U.S. equities, selected based on the following four fundamental measures of firm size: book value, income, sales and dividends. U.S. equities are then weighted by each of these four fundamental measures.An overall weight is calculated for each firm by equally-weighting each fundamental measure.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.39% for this ETF, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.81%.
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.
PRF's heaviest allocation is in the Financials sector, which is about 20.50% of the portfolio. Its Information Technology and Healthcare round out the top three.
Looking at individual holdings, Berkshire Hathaway Inc (BRK/B) accounts for about 2.78% of total assets, followed by Apple Inc (AAPL - Free Report) and Microsoft Corp (MSFT - Free Report) .
Its top 10 holdings account for approximately 19% of PRF's total assets under management.
Performance and Risk
Year-to-date, the Invesco FTSE RAFI US 1000 ETF has gained about 1.70% so far, and was up about 11.67% over the last 12 months (as of 02/07/2024). PRF has traded between $29.89 and $35.95 in this past 52-week period.
PRF has a beta of 1 and standard deviation of 16.05% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 1008 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco FTSE RAFI US 1000 ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
Schwab U.S. Dividend Equity ETF (SCHD - Free Report) tracks Dow Jones U.S. Dividend 100 Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $52.58 billion in assets, Vanguard Value ETF has $107.50 billion. SCHD has an expense ratio of 0.06% and VTV charges 0.04%.
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 - Large Cap Value.
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.