The Invesco FTSE RAFI US 1500 Small-Mid ETF (PRFZ) was launched on 09/20/2006, and is a passively managed exchange traded fund designed to offer broad exposure to the Small Cap Blend segment of the US equity market.
The fund is sponsored by Invesco. It has amassed assets over $2.54 billion, making it one of the larger ETFs attempting to match the Small Cap Blend segment of the US equity market.
Why Small Cap Blend
Sitting at a market capitalization below $2 billion, small cap companies tend to be high-potential stocks compared to its large and mid cap counterparts, but come with higher risk.
Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.
Costs
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.39%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.45%.
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 to the Financials sector--about 20% of the portfolio. Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Applovin Corp (APP) accounts for about 0.72% of total assets, followed by Brinker International Inc (EAT) and Carvana Co (CVNA).
The top 10 holdings account for about 4.3% of total assets under management.
Performance and Risk
PRFZ seeks to match the performance of the FTSE RAFI US 1500 Small-Mid Index before fees and expenses. 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.
The ETF has lost about -0.05% so far this year and was up about 17.04% in the last one year (as of 01/15/2025). In the past 52-week period, it has traded between $35.39 and $45.39.
The ETF has a beta of 1.19 and standard deviation of 21.69% for the trailing three-year period, making it a medium risk choice in the space. With about 1446 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco FTSE RAFI US 1500 Small-Mid ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, PRFZ is a reasonable option for those seeking exposure to the Style Box - Small Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 2000 ETF (IWM) and the iShares Core S&P Small-Cap ETF (IJR) track a similar index. While iShares Russell 2000 ETF has $71.09 billion in assets, iShares Core S&P Small-Cap ETF has $87.24 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.
Bottom-Line
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
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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Get it free >>Invesco FTSE RAFI US 1500 Small-Mid ETF (PRFZ): ETF Research Reports
Brinker International, Inc. (EAT) : Free Stock Analysis Report
AppLovin Corporation (APP) : Free Stock Analysis Report
iShares Russell 2000 ETF (IWM): ETF Research Reports
iShares Core S&P Small-Cap ETF (IJR): ETF Research Reports
Carvana Co. (CVNA) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
