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Is Invesco FTSE RAFI US 1000 ETF (PRF) a Strong ETF Right Now?
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Launched on 12/19/2005, the Invesco FTSE RAFI US 1000 ETF (PRF - Free Report) is a smart beta exchange traded fund offering 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.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Because the fund has amassed over $6.81 billion, this makes it one of the larger ETFs in the Style Box - Large Cap Value. PRF is managed by Invesco. Before fees and expenses, PRF seeks to match the performance of the FTSE RAFI US 1000 Index.
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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Operating expenses on an annual basis are 0.39% for PRF, making it on par with most peer products in the space.
PRF's 12-month trailing dividend yield is 1.71%.
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 Financials sector - about 21.10% of the portfolio. Information Technology and Healthcare round out the top three.
Taking into account individual holdings, Berkshire Hathaway Inc (BRK/B) accounts for about 2.30% of the fund's total assets, followed by Exxon Mobil Corp (XOM - Free Report) and Microsoft Corp (MSFT - Free Report) .
Its top 10 holdings account for approximately 16.93% of PRF's total assets under management.
Performance and Risk
So far this year, PRF has added about 7.08%, and is up about 21.32% in the last one year (as of 04/11/2024). During this past 52-week period, the fund has traded between $30.37 and $38.47.
PRF has a beta of 1 and standard deviation of 15.78% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 1014 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 $54.74 billion in assets, Vanguard Value ETF has $113.23 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?
Launched on 12/19/2005, the Invesco FTSE RAFI US 1000 ETF (PRF - Free Report) is a smart beta exchange traded fund offering 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.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Because the fund has amassed over $6.81 billion, this makes it one of the larger ETFs in the Style Box - Large Cap Value. PRF is managed by Invesco. Before fees and expenses, PRF seeks to match the performance of the FTSE RAFI US 1000 Index.
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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Operating expenses on an annual basis are 0.39% for PRF, making it on par with most peer products in the space.
PRF's 12-month trailing dividend yield is 1.71%.
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 Financials sector - about 21.10% of the portfolio. Information Technology and Healthcare round out the top three.
Taking into account individual holdings, Berkshire Hathaway Inc (BRK/B) accounts for about 2.30% of the fund's total assets, followed by Exxon Mobil Corp (XOM - Free Report) and Microsoft Corp (MSFT - Free Report) .
Its top 10 holdings account for approximately 16.93% of PRF's total assets under management.
Performance and Risk
So far this year, PRF has added about 7.08%, and is up about 21.32% in the last one year (as of 04/11/2024). During this past 52-week period, the fund has traded between $30.37 and $38.47.
PRF has a beta of 1 and standard deviation of 15.78% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 1014 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 $54.74 billion in assets, Vanguard Value ETF has $113.23 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.