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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?
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 work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
PRFZ is managed by Invesco, and this fund has amassed over $2.52 billion, which makes 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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for PRFZ are 0.39%, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.21%.
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.
PRFZ's heaviest allocation is in the Financials sector, which is about 19.80% of the portfolio. Its Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Carvana Co (CVNA - Free Report) accounts for about 0.36% of total assets, followed by Virtu Financial Inc (VIRT - Free Report) and Carpenter Technology Corp (CRS - Free Report) .
The top 10 holdings account for about 2.86% of total assets under management.
Performance and Risk
The ETF has added roughly 10.12% and was up about 25.89% so far this year and in the past one year (as of 09/26/2024), respectively. PRFZ has traded between $30.38 and $42.06 during this last 52-week period.
PRFZ has a beta of 1.17 and standard deviation of 21.70% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 1476 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 $68.97 billion in assets, iShares Core S&P Small-Cap ETF has $84.69 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?
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 work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
PRFZ is managed by Invesco, and this fund has amassed over $2.52 billion, which makes 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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for PRFZ are 0.39%, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.21%.
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.
PRFZ's heaviest allocation is in the Financials sector, which is about 19.80% of the portfolio. Its Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Carvana Co (CVNA - Free Report) accounts for about 0.36% of total assets, followed by Virtu Financial Inc (VIRT - Free Report) and Carpenter Technology Corp (CRS - Free Report) .
The top 10 holdings account for about 2.86% of total assets under management.
Performance and Risk
The ETF has added roughly 10.12% and was up about 25.89% so far this year and in the past one year (as of 09/26/2024), respectively. PRFZ has traded between $30.38 and $42.06 during this last 52-week period.
PRFZ has a beta of 1.17 and standard deviation of 21.70% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 1476 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 $68.97 billion in assets, iShares Core S&P Small-Cap ETF has $84.69 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.