Launched 12/19/2005, the Invesco RAFI US 1000 ETF (PRF – Free Report) is a smart beta ETF that provides broad exposure to the Style Box category – the large value category of the market.
What are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market capitalization-weighted indexes, a strategy created to reflect a market or a particular sector of the market.
Market cap weighted indices work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way to replicate market returns.
But there are some investors who prefer to invest in smart beta funds; These funds follow no-cap weighted strategies and are a solid choice for those who prefer to pick large stocks to beat the market.
Non-cap weighted indices attempt to select stocks that have the best chance of risk-return performance, which is based on specific fundamental characteristics, or a combination of these other characteristics.
While this space offers a number of options for investors, including the simplest equal weighting, fundamental weighting, and volatility/momentum based weighting methodologies, not all of these strategies have been able to produce superior results.
Fund and index sponsor
Since the fund has raised more than $8.72 billion, this makes it one of the Style Box’s largest ETFs – a large cap. PRF is managed by Invesco. PRF seeks to match the performance of the FTSE RAFI US 1000 Index before fees and expenses.
The RAFI Fundamental Select US 1000 Index tracks the performance of the largest U.S. stocks, selected based on the following four basic measures of company size: book value, cash flow, sales and dividends.
Cost and other expenses
For ETF investors, expense ratios are an important factor when considering a fund’s return; Over the long term, cheaper funds have the potential to outperform their more expensive cousins if all other things remain the same.
YoY operating expenses are 0.34% for PRF, putting it on par with most peer products in this space.
PRF’s 12-month dividend yield is 1.56%.
Sector exposure and top holdings
Although ETFs offer diversified exposure that reduces the risk of individual stocks, investors should also look at the actual holdings within the fund. Fortunately, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has the largest allocation to the financial sector – about 19% of the portfolio. IT and healthcare round out the top three.
When you look at individual holdings, Alphabet Inc (GOOGL) represents about 4.51% of the fund’s total assets, followed by Apple Inc (AAPL) and Microsoft Corp (MSFT).
Its top 10 holdings represent approximately 22.35% of PRF’s total assets under management.
Performance and risks
The ETF has gained about 1.79% so far this year and is up about 19.44% in the past year (as of 06/01/2026). Over the past 52-week period, it has traded between $35.77 and $47.76.
The fund has a beta of 0.88 and a standard deviation of 13.39% for the trailing three-year period, making PRF a moderate-risk option in this particular area. With around 1,082 holdings, it effectively diversifies the company’s risks.
Alternatives
The Invesco RAFI US 1000 ETF is a sensible choice for investors seeking to outperform the Style Box – Large Cap Value sector of the market. However, there are other ETFs in this space that investors can consider.
The Schwab US Dividend Equity ETF (SCHD) tracks the Dow Jones US Dividend 100 Index and the Vanguard Value ETF (VTV) tracks the CRSP US Large Cap Value Index. The Schwab US Dividend Equity ETF has $72.84 billion in assets, while the Vanguard Value ETF has $159 billion. SCHD has an expense ratio of 0.06% and VTV changes of 0.04%.
Investors looking for cheaper, lower-risk options should consider traditional market cap ETFs that aim to match the returns of Style Box – Large Cap Value.
Want the latest recommendations from Zacks Investment Research? Download the 7 best stocks for the next 30 days. Click to get this free report
