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Launched on 09/20/2006, the Invesco FTSE RAFI US 1500 SmallMid ETF (PRFZ) is a passively managed exchange traded fund designed to provide a broad exposure to the Small Cap Blend segment of the US equity market.
The fund is sponsored by Invesco. It has amassed assets over $2.06 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 are aptly named, since they tend to hold a mix of growth and value stocks, as well as show characteristics of both kinds of equities.
Costs
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
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 1.25%.
Sector Exposure and Top Holdings
ETFs offer a 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.
This ETF has heaviest allocation to the Financials sector--about 20.50% of the portfolio. Industrials and Information Technology round out the top three.
Looking at individual holdings, Continental Resources Inc/ok (CLR) accounts for about 0.52% of total assets, followed by Centennial Resource Development Inc/de (CDEV) and Matador Resources Co (MTDR).
The top 10 holdings account for about 3.89% 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 -16.31% so far this year and is down about -5.95% in the last one year (as of 07/20/2022). In the past 52-week period, it has traded between $149.12 and $201.01.
The ETF has a beta of 1.17 and standard deviation of 29.66% for the trailing three-year period, making it a medium risk choice in the space. With about 1438 holdings, it effectively diversifies company-specific risk.