Invesco RAFI Strategic US ETF (IUS)

Overview

The Invesco RAFI Strategic US ETF (PRF) seeks to track the investment results of the RAFI Fundamental US Index, which selects companies based on fundamental factors such as book value, cash flow, sales, and dividends rather than market capitalization. It focuses on US equities, diversifying across various sectors and aiming for long-term capital appreciation by emphasizing value stocks.

Reputation and Reliability

Invesco is a well-established and reputable global investment management firm with a long track record in the ETF market.

Management Expertise

Invesco has a large and experienced team of investment professionals managing its ETF offerings, possessing significant expertise in quantitative and fundamental investing.

Goal

To track the investment results of the RAFI Fundamental US Index.

Investment Approach and Strategy

Strategy: The ETF aims to track a specific index (RAFI Fundamental US Index) that selects companies based on fundamental factors.

Composition The ETF holds primarily US equities, diversified across various sectors. The weighting of holdings is determined by fundamental factors rather than market capitalization.

Market Share: Data unavailable for precise market share.

Total Net Assets (AUM): 1850000000

Key Competitors

• Schwab Fundamental U.S. Large Company Index ETF (FNDX)
• Vanguard Value ETF (VTV)
• iShares Russell 1000 Value ETF (IWD)

Competitive Landscape

The ETF industry is highly competitive, with numerous providers offering value-oriented and fundamentally weighted ETFs. PRF's advantage lies in its distinct fundamental weighting methodology, which may provide different risk-return characteristics compared to market-cap-weighted or other fundamental-based ETFs. Its disadvantage may be lower liquidity compared to larger, more popular ETFs like VTV.

Historical Performance: Historical performance data is readily available from financial websites. Performance varies based on market conditions.

Benchmark Comparison: Performance can be compared to the RAFI Fundamental US Index to assess tracking effectiveness. Tracking error is generally low.

Expense Ratio: 0.0039

Average Trading Volume

Average daily trading volume varies but generally indicates adequate liquidity for typical trading needs.

Bid-Ask Spread

The bid-ask spread is typically tight, reflecting sufficient liquidity, though it can widen during periods of market volatility.

Market Environment Factors

Economic indicators such as GDP growth, interest rates, and inflation, sector growth prospects, and overall market sentiment influence the performance of the ETF.

Growth Trajectory

Growth depends on the performance of fundamentally strong US companies. Holdings and strategy remain relatively stable over time, focusing on long-term value.

Competitive Edge

PRF's competitive edge stems from its unique RAFI fundamental indexing methodology, which selects companies based on financial factors rather than market cap. This approach may lead to a portfolio with a different risk-return profile, potentially outperforming market-cap-weighted indexes during periods of value outperformance. The diversification across sectors and emphasis on fundamentally sound companies also contribute to its appeal. However, this strategy can underperform during periods of growth stock dominance, which can be seen as a disadvantage.

Volatility

Volatility is generally comparable to other US equity ETFs, potentially lower than growth-oriented ETFs, but higher than broad market ETFs.

Market Risk

The ETF is subject to market risk, including fluctuations in equity prices and sector-specific risks impacting the underlying holdings. Economic downturns and changes in interest rates can affect performance.

Ideal Investor Profile

The ideal investor is a long-term investor seeking exposure to US equities with a value-oriented approach. Suitable for investors looking for diversification and potentially higher returns compared to market-cap-weighted indexes.

Market Risk

This ETF is best for long-term investors seeking value and fundamental-driven investment strategies, not necessarily active traders or passive index followers seeking purely market-cap-weighted exposure.

The Invesco RAFI Strategic US ETF (PRF) provides exposure to US equities selected based on fundamental factors, offering a value-oriented investment approach. The ETF targets to track the RAFI Fundamental US Index and is suitable for long-term investors seeking diversification and potentially higher returns. Its expense ratio is relatively low, making it a cost-effective option for value-focused investors. However, potential investors should consider the risks associated with market fluctuations and value investing strategies that may underperform in growth-driven markets.

Data Sources:

• Invesco.com
• Morningstar.com
• ETF.com

Disclaimers:

The data provided is for informational purposes only and should not be considered investment advice. Past performance is not indicative of future results. Market conditions can change quickly and results will vary.