Advertisement
New Zealand markets close in 2 hours 26 minutes
  • NZX 50

    12,552.17
    -20.49 (-0.16%)
     
  • NZD/USD

    0.6211
    -0.0003 (-0.06%)
     
  • NZD/EUR

    0.5627
    -0.0001 (-0.02%)
     
  • ALL ORDS

    8,374.40
    -99.90 (-1.18%)
     
  • ASX 200

    8,108.40
    -96.80 (-1.18%)
     
  • OIL

    73.71
    0.00 (0.00%)
     
  • GOLD

    2,677.50
    -1.70 (-0.06%)
     
  • NASDAQ

    19,793.34
    -9.24 (-0.05%)
     
  • FTSE

    8,282.52
    -8.34 (-0.10%)
     
  • Dow Jones

    42,011.59
    -184.93 (-0.44%)
     
  • DAX

    19,015.41
    -149.34 (-0.78%)
     
  • Hang Seng

    22,113.51
    0.00 (0.00%)
     
  • NIKKEI 225

    38,530.36
    -21.70 (-0.06%)
     
  • NZD/JPY

    91.0300
    -0.1710 (-0.19%)
     

Should Invesco FTSE RAFI US 1000 ETF (PRF) Be on Your Investing Radar?

If you're interested in broad exposure to the Large Cap Value segment of the US equity market, look no further than the Invesco FTSE RAFI US 1000 ETF (PRF), a passively managed exchange traded fund launched on 12/19/2005.

The fund is sponsored by Invesco. It has amassed assets over $5.99 billion, making it one of the larger ETFs attempting to match the Large Cap Value segment of the US equity market.

Why Large Cap Value

Large cap companies usually have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.

Value stocks have lower than average price-to-earnings and price-to-book ratios. They also have lower than average sales and earnings growth rates. Considering long-term performance, value stocks have outperformed growth stocks in almost all markets; however, they are more likely to underperform growth stocks in strong bull markets.

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 2.01%.

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 19.40% of the portfolio. Information Technology and Healthcare round out the top three.

Looking at individual holdings, Berkshire Hathaway Inc (BRK/B) accounts for about 2.65% of total assets, followed by Apple Inc (AAPL) and Microsoft Corp (MSFT).

The top 10 holdings account for about 17.87% of total assets under management.

Performance and Risk

PRF seeks to match the performance of the FTSE RAFI US 1000 Index before fees and expenses. The FTSE RAFI US 1000 Index is designed to track the performance of the largest U.S. equities, selected based on the following four fundamental measures of firm size: book value, income, sales and dividends. U.S. equities are then weighted by each of these four fundamental measures.An overall weight is calculated for each firm by equally-weighting each fundamental measure.

The ETF return is roughly 3.76% so far this year and is up about 0.08% in the last one year (as of 06/09/2023). In the past 52-week period, it has traded between $138.77 and $165.35.

The ETF has a beta of 1 and standard deviation of 17.82% for the trailing three-year period, making it a medium risk choice in the space. With about 1013 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco FTSE RAFI US 1000 ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, PRF is a great option for investors seeking exposure to the Style Box - Large Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.

The iShares Russell 1000 Value ETF (IWD) and the Vanguard Value ETF (VTV) track a similar index. While iShares Russell 1000 Value ETF has $49.88 billion in assets, Vanguard Value ETF has $97.89 billion. IWD has an expense ratio of 0.18% and VTV charges 0.04%.

Bottom-Line

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

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.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Invesco FTSE RAFI US 1000 ETF (PRF): ETF Research Reports

Apple Inc. (AAPL) : Free Stock Analysis Report

Microsoft Corporation (MSFT) : Free Stock Analysis Report

Vanguard Value ETF (VTV): ETF Research Reports

iShares Russell 1000 Value ETF (IWD): ETF Research Reports

To read this article on Zacks.com click here.

Zacks Investment Research