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Is Invesco FTSE RAFI US 1500 Small-Mid ETF (PRFZ) a Strong ETF Right Now?
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Designed to provide broad exposure to the Style Box - Small Cap Blend category of the market, the Invesco FTSE RAFI US 1500 Small-Mid ETF (PRFZ - Free Report) is a smart beta exchange traded fund launched on 09/20/2006.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
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
Managed by Invesco, PRFZ has amassed assets over $2.52 billion, making it one of the larger ETFs in the Style Box - Small Cap Blend. Before fees and expenses, PRFZ 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
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.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.39%.
PRFZ's 12-month trailing dividend yield is 1.23%.
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.
For PRFZ, it has heaviest allocation in the Financials sector --about 20% of the portfolio --while Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Carvana Co (CVNA - Free Report) accounts for about 0.29% of total assets, followed by Cirrus Logic Inc (CRUS - Free Report) and Abercrombie & Fitch Co (ANF - Free Report) .
The top 10 holdings account for about 2.59% of total assets under management.
Performance and Risk
So far this year, PRFZ return is roughly 10.36%, and it's up approximately 15.34% in the last one year (as of 07/26/2024). During this past 52-week period, the fund has traded between $30.38 and $41.64.
PRFZ has a beta of 1.18 and standard deviation of 21.35% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 1491 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco FTSE RAFI US 1500 Small-Mid 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 Small-Cap ETF (IJR - Free Report) tracks S&P SmallCap 600 Index. IShares Russell 2000 ETF has $70 billion in assets, iShares Core S&P Small-Cap ETF has $84.71 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 Small-Mid ETF (PRFZ) a Strong ETF Right Now?
Designed to provide broad exposure to the Style Box - Small Cap Blend category of the market, the Invesco FTSE RAFI US 1500 Small-Mid ETF (PRFZ - Free Report) is a smart beta exchange traded fund launched on 09/20/2006.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
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
Managed by Invesco, PRFZ has amassed assets over $2.52 billion, making it one of the larger ETFs in the Style Box - Small Cap Blend. Before fees and expenses, PRFZ 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
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.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.39%.
PRFZ's 12-month trailing dividend yield is 1.23%.
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.
For PRFZ, it has heaviest allocation in the Financials sector --about 20% of the portfolio --while Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Carvana Co (CVNA - Free Report) accounts for about 0.29% of total assets, followed by Cirrus Logic Inc (CRUS - Free Report) and Abercrombie & Fitch Co (ANF - Free Report) .
The top 10 holdings account for about 2.59% of total assets under management.
Performance and Risk
So far this year, PRFZ return is roughly 10.36%, and it's up approximately 15.34% in the last one year (as of 07/26/2024). During this past 52-week period, the fund has traded between $30.38 and $41.64.
PRFZ has a beta of 1.18 and standard deviation of 21.35% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 1491 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco FTSE RAFI US 1500 Small-Mid 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 Small-Cap ETF (IJR - Free Report) tracks S&P SmallCap 600 Index. IShares Russell 2000 ETF has $70 billion in assets, iShares Core S&P Small-Cap ETF has $84.71 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.