Is Invesco RAFI US 1000 ETF (PRF) a Strong ETF Right Now?

Designed to provide broad exposure to the Style Box - Large Cap Value category of the market, the Invesco RAFI US 1000 ETF (PRF) is a smart beta exchange traded fund launched on 12/19/2005.

What Are Smart Beta ETFs?

Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.

Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.

On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.

Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.

Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.

Fund Sponsor & Index

PRF is managed by Invesco, and this fund has amassed over $8.17 billion, which makes it one of the larger ETFs in the Style Box - Large Cap Value. This particular fund, before fees and expenses, seeks to match the performance of the FTSE RAFI US 1000 Index.

The RAFI Fundamental Select US 1000 Index tracks the performance of the largest US equities, selected based on the following four fundamental measures of firm size: book value, cash flow, sales and dividends.

Cost & Other Expenses

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

With on par with most peer products in the space, this ETF has annual operating expenses of 0.33%.

It has a 12-month trailing dividend yield of 1.79%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Financials sector - about 21.5% of the portfolio. Information Technology and Healthcare round out the top three.

Looking at individual holdings, Microsoft Corp (MSFT) accounts for about 2.39% of total assets, followed by Berkshire Hathaway Inc (BRK/B) and Apple Inc (AAPL).

The top 10 holdings account for about 19.42% of total assets under management.

Performance and Risk

The ETF has added roughly 4.3% so far this year and is up roughly 11.69% in the last one year (as of 06/25/2025). In the past 52-week period, it has traded between $35.77 and $42.90

PRF has a beta of 0.91 and standard deviation of 15.31% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 1092 holdings, it effectively diversifies company-specific risk .

Alternatives

Invesco RAFI US 1000 ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.

Schwab U.S. Dividend Equity ETF (SCHD) tracks Dow Jones U.S. Dividend 100 Index and the Vanguard Value ETF (VTV) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $70.18 billion in assets, Vanguard Value ETF has $137.12 billion. SCHD has an expense ratio of 0.06% and VTV changes 0.04%.

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 - Large Cap Value

Bottom Line

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This article originally published on Zacks Investment Research (zacks.com).

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