Launched on 09/20/2006, the Invesco RAFI US 1500 Small-Mid ETF (PRFZ) is a smart beta exchange traded fund offering broad exposure to the Style Box - Small Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is managed by Invesco. PRFZ has been able to amass assets over $2.76 billion, making it one of the larger ETFs in the Style Box - Small Cap Blend. This particular fund 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.
Cost & Other Expenses
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 PRFZ are 0.34%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.77%.
Sector Exposure and Top Holdings
ETFs offer 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.
Representing 18.6% of the portfolio, the fund has heaviest allocation to the Industrials sector; Healthcare and Financials round out the top three.
Taking into account individual holdings, Opendoor Technologies Inc (OPEN) accounts for about 0.98% of the fund's total assets, followed by Hecla Mining Co (HL) and Ionis Pharmaceuticals Inc (IONS).
Its top 10 holdings account for approximately 4.73% of PRFZ's total assets under management.
Performance and Risk
The ETF return is roughly 6.97% and it's up approximately 15.74% so far this year and in the past one year (as of 02/10/2026), respectively. PRFZ has traded between $33.13 and $49.73 during this last 52-week period.
The fund has a beta of 1.08 and standard deviation of 20.27% for the trailing three-year period, which makes PRFZ a medium risk choice in this particular space. With about 1425 holdings, it effectively diversifies company-specific risk .
Alternatives
Invesco RAFI US 1500 Small-Mid ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
iShares Russell 2000 ETF (IWM) tracks Russell 2000 Index and the iShares Core S&P Small-Cap ETF (IJR) tracks S&P SmallCap 600 Index. iShares Russell 2000 ETF has $77.49 billion in assets, iShares Core S&P Small-Cap ETF has $97.08 billion. IWM has an expense ratio of 0.19% and IJR changes 0.06%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Small Cap Blend
Bottom Line
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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Invesco RAFI US 1500 Small-Mid ETF (PRFZ): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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