Invesco FTSE RAFI US 1500 Small-Mid ETF (PRFZ)

Overview

The Invesco FTSE RAFI US 1500 Small-Mid ETF (PRFZ) seeks to track the FTSE RAFI US 1500 Mid-Small Index. It focuses on US small- and mid-cap companies, utilizing a fundamental, rules-based index weighting methodology instead of market capitalization weighting. The ETF aims for long-term capital appreciation.

Reputation and Reliability

Invesco is a large, established asset management firm with a strong reputation. They offer a wide range of ETFs and investment products.

Management Expertise

Invesco has extensive experience in managing ETFs, including those using fundamental indexing strategies. Their management team includes professionals with expertise in portfolio management and quantitative analysis.

Goal

The ETF aims to replicate the investment results of the FTSE RAFI US 1500 Mid-Small Index.

Investment Approach and Strategy

Strategy: The ETF tracks a fundamentally weighted index, the FTSE RAFI US 1500 Mid-Small Index. This index selects and weights companies based on fundamental measures like sales, cash flow, book value, and dividends, rather than market capitalization.

Composition The ETF primarily holds stocks of small- and mid-capitalization U.S. companies.

Market Share: Insufficient data available to determine specific market share.

Total Net Assets (AUM): 1487000000

Key Competitors

• IJR
• VB
• VBR
• SCHA

Competitive Landscape

The small- and mid-cap ETF market is competitive. PRFZ differentiates itself through its fundamental weighting methodology, which may lead to different performance compared to market-cap weighted competitors like IJR and VB. This approach aims to capture value and reduce exposure to overvalued stocks, but it may also result in higher tracking error relative to market-cap-weighted indexes. PRFZ's AUM is significantly smaller than its competitors, which could affect liquidity.

Historical Performance: Historical performance data would need to be gathered from financial data providers.

Benchmark Comparison: Benchmark comparison requires historical performance data compared to the FTSE RAFI US 1500 Mid-Small Index.

Expense Ratio: 0.39

Average Trading Volume

The ETF exhibits moderate liquidity, with an average daily trading volume that facilitates relatively easy buying and selling for most investors.

Bid-Ask Spread

The bid-ask spread is generally narrow, indicating efficient trading and lower transaction costs.

Market Environment Factors

Economic growth, interest rate changes, and inflation can all impact the performance of small- and mid-cap companies, which in turn affects the ETF. Sector-specific trends within the small- and mid-cap universe also play a role.

Growth Trajectory

The ETF's growth trajectory depends on the performance of the underlying index and investor demand for fundamentally weighted small- and mid-cap exposure. Changes in the index's methodology or the ETF's holdings can also influence its performance.

Competitive Edge

PRFZu2019s competitive edge lies in its fundamentally weighted approach, potentially offering superior returns compared to market-cap weighted indexes. This strategy seeks to identify undervalued companies, providing a value tilt within the small-mid cap space. The rules-based approach adds transparency and consistency to the investment process. However, fundamental indexing can underperform during periods of strong growth for momentum stocks.

Volatility

Small- and mid-cap stocks are generally more volatile than large-cap stocks, and PRFZ's fundamental weighting may further amplify or mitigate volatility.

Market Risk

The ETF is subject to market risk, meaning its value can fluctuate based on overall market conditions and investor sentiment, as well as sector-specific risks within the small- and mid-cap universe.

Ideal Investor Profile

The ETF is suitable for investors seeking long-term capital appreciation through exposure to small- and mid-cap US companies and who believe in the potential benefits of fundamental indexing.

Market Risk

PRFZ is best suited for long-term investors who are comfortable with the volatility associated with small- and mid-cap stocks and who seek a value-oriented approach.

The Invesco FTSE RAFI US 1500 Small-Mid ETF (PRFZ) offers exposure to the US small- and mid-cap market using a fundamental indexing strategy. This approach differentiates it from market-cap weighted peers and may appeal to investors seeking a value tilt. While potentially offering superior returns, the fund carries the risks associated with small- and mid-cap stocks and the specific weighting methodology. It is best suited for long-term investors with a moderate to high risk tolerance and belief in fundamental investing.

Data Sources:

• Invesco Official Website
• FactSet
• Morningstar
• ETF.com

Disclaimers:

The data and analysis provided are for informational purposes only and should not be considered investment advice. Investment decisions should be based on your own research and consultation with a financial advisor. Market share data may be based on estimates and available information. Past performance is not indicative of future results.