Should Invesco RAFI US 1500 Small-Mid ETF (PRFZ) Be on Your Investing Radar?

If you're interested in broad exposure to the Small Cap Blend segment of the US equity market, look no further than the Invesco RAFI US 1500 Small-Mid ETF (PRFZ), a passively managed exchange traded fund launched on 09/20/2006.

The fund is sponsored by Invesco. It has amassed assets over $2.43 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

With more potential comes more risk, and small cap companies, with market capitalization below $2 billion, epitomizes this way of thinking.

Typically holding a combination of both growth and value stocks, blend ETFs also demonstrate qualities seen in value and growth investments.

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 0.34%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.21%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Financials sector--about 18.70% of the portfolio. Industrials and Information Technology round out the top three.

Looking at individual holdings, Applovin Corp (APP) accounts for about 0.49% of total assets, followed by Carpenter Technology Corp (CRS) and Carvana Co (CVNA).

The top 10 holdings account for about 3.73% 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 RAFI Fundamental Select US 1500 Index tracks the performance of small and medium-sized US companies, based on the four fundamental measures of size: book value, cash flow, sales and dividends.

The ETF return is roughly 1.95% so far this year and was up about 5.28% in the last one year (as of 07/25/2025). In the past 52-week period, it has traded between $33.13 and $45.39.

The ETF has a beta of 1.09 and standard deviation of 21.31% for the trailing three-year period, making it a medium risk choice in the space. With about 1714 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco 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 Vanguard Small-Cap ETF (VB) and the iShares Core S&P Small-Cap ETF (IJR) track a similar index. While Vanguard Small-Cap ETF has $65.51 billion in assets, iShares Core S&P Small-Cap ETF has $82.09 billion. VB has an expense ratio of 0.05% 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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This article originally published on Zacks Investment Research (zacks.com).

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