Invesco FTSE RAFI US 1500 SmallMid ETF (PRFZMore – Free Report) is a passively managed exchange-traded fund designed to provide broad exposure to the small cap blended segment of the U.S. equity market.
This fund is sponsored by Invesco. Having amassed over $2.03 billion in assets, he is one of the largest his ETFs to rival the Small His Cap His Blended segment of the US stock market.
Why Choose Small Cap Blend?
The higher the probability, the higher the risk. Small-cap companies with a market capitalization of less than $2 billion epitomize this thinking.
Blended ETFs tend to hold a mix of growth and value stocks, and are aptly named because they tend to exhibit characteristics of both types of stocks.
cost
Investors should also pay attention to the ETF’s expense ratio. Assuming all other metrics are equal, low-cost products produce better results than high-cost products.
The annual operating cost of this ETF is 0.39%, which is on par with most similar products in this space.
The 12-month trailing dividend yield is 1.25%.
Sector exposure and top holdings
ETFs offer a wide variety of exposures that minimize the risk of a single stock, but it is still important to examine a fund’s holdings before investing. Fortunately, most ETFs are highly transparent. It is an expensive commodity and we disclose our holdings daily.
The ETF has the largest allocation to the industrial sector, which is around 18.60% of the portfolio. Financials and discretionary goods round out the top three.
Looking at individual holdings, Scorpio Tankers Inc (STNG – Free Report) accounted for approximately 0.60% of total assets and Consol Energy Inc (CEIX – Free Report) and Super Micro Computer Inc (SMCI – free report).
The top 10 stocks account for approximately 3.08% of total assets under management.
performance and risk
PRFZ aims to match the performance before fees and expenses of the FTSE RAFI US 1500 Small-Mid Index. The FTSE RAFI US 1500 Small-Mid Index is composed of approximately 1,500 US stocks. The FTSE US 1500 Small-Mid Index is designed to track the performance of small and medium-sized US equities selected on the basis of four basic measures of company size: book value, income and cash flow. , and dividends.
The ETF is up about 6.21% so far this year and is down about -4.40% over the past year (as of 23 January 2023). Over the past 52 weeks, it has traded between $145.71 and $187.88.
The ETF’s beta is 1.16, with a standard deviation of 30.61% over the past three years, making it a medium-risk option in this space. Approximately 1447 holdings effectively diversify company-specific risks.
Alternative proposal
The Invesco FTSE RAFI US 1500 SmallMid ETF has a Zacks ETF Rank of 3 (Hold). This is based on factors such as expected returns, expense ratios and momentum for the asset class. The PRFZ is therefore a reasonable option for those looking for exposure to the style box – small cap blend area of the market. Investors may also want to consider his other ETF options in this space.
iShares Russell 2000 ETF (IWM – Free Report) and iShares Core S&P SmallCap ETF (IJR – Free Report) tracks similar indexes. The iShares Russell 2000 ETF has $54.47 billion in assets, while the iShares Core S&P SmallCap ETF has $68.80 billion in assets. IWM’s expense ratio is 0.19% and IJR’s fee is 0.06%.
bottom line
While an excellent vehicle for long-term investors, passively managed ETFs are popular among institutional and retail investors due to their low cost, transparency, flexibility and tax benefits.
Visit the Zacks ETF Center to learn more about this and other ETFs, select products that meet your investment objectives, and read articles about the latest developments in the ETF investment universe.
