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Invesco FTSE RAFI US 1000 ETF

Powershares FTSE RAFI US 1000 Portfolio

Financial Services

Technology

Healthcare

Consumer Cyclical

Industrials

Energy

Consumer Defensive

Communication Services

Utilities

Real Estate

Basic Materials

Other

The Fund generally will invest at least 90% of its total assets in securities that comprise the Underlying Index. The underlying Index is composed of approximately 1,000 common stocks and is designed to track the performance of the largest U.S. companies based on the following four fundamental measures of firm size: book value, cash flow, sales and dividends.

Berkshire Hathaway, Inc.

Apple Inc

Exxon Mobil Corp.

JP Morgan Chase & Co

Microsoft Corp

Amazon.Com Inc

Bank Of America Corp.

Veritone Inc Common Stock Usd 0.001

Chevron Corp.

Citigroup Inc.

News

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Trading Ideas

ETFs

MSFT

PowerShares Exchange Traded Fund FTSE RAFI US 1000 Portfolio

A smart beta exchange traded fund, the Invesco FTSE RAFI US 1000 ETF (ARCA:PRF) debuted on 12/19/2005, and offers broad exposure to the Style Box - Large Cap Value category of the market.

What Are Smart Beta ETFs?

Is Invesco FTSE RAFI US 1000 ETF a Strong ETF Right Now?

Long Ideas

Specialty ETFs

Global

A Dandy Developed Markets ETF

Analyst Color

Broad U.S. Equity ETFs

New ETFs

Analyst Ratings

PXLG

PowerShares S&P 500 Low Volatility Portfolio

SPLV

An ETF For Easy Asset Allocation

Bonds

BKLN

PowerShares Fundamental High Yieldorate Bond Portfolio

PowerShares Launches Four Multi-Asset ETFs

Eurozone

PowerShares FTSE RAFI Developed Markets ex-US Portfolio

Value With An International ETF

PowerShares FTSE RAFI US 1500 Small-Mid Portfolio

PRFZ

An Old School Smart Beta ETF Is Having A Solid Year

Emerging Markets

Emerging Market ETFs

Politics

General

PowerShares Exchange-Traded Fund Trust II PowerShares FTSE RAFI Emerging Markets Portfolio

Value Is Working Here, Too

Fantastic Fundamental Application With This Emerging Markets ETF

Old School Smart Beta ETF Enjoys Value&#39;s Resurgence

An ETF That Cements The Case For Smart Beta

PIMCO U.S. Treasury Index Fund PIMCO Preferred and Capital Securities Active Exchange-Traded Fund

PERFICIENT INC COM

PROSPEROUS FUTURE HLDGS by PROSPEROUS FUTURE HLDGS LTD.

Prosperous Future Holdings Ltd

PainReform Ltd

Invesco FTSE RAFI US 1500 Small-Mid ETF

A smart beta exchange traded fund, the Invesco FTSE RAFI US 1000 ETF (ARCA:PRF) debuted on 12/19/2005, and offers broad exposure to the Style Box - Large Cap Value 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 offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
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 &amp; Index
The fund is managed by Invesco, and has been able to amass over $6.81 billion, which makes it one of the larger ETFs in the Style Box - Large Cap Value. Before fees and expenses, PRF seeks to match the performance of the FTSE RAFI US 1000 Index.
The FTSE RAFI US 1000 Index is designed to track the performance of the largest U.S. equities, selected based on the following four fundamental measures of firm size: book value, income, sales and dividends. U.S. equities are then weighted by each of these four fundamental measures.An overall weight is calculated for each firm by equally-weighting each fundamental measure.
Cost &amp; Other Expenses
Investors should also pay attention to an ETF&#39;s expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.39%, making it on par with most peer products in the space.
It&#39;s 12-month trailing dividend yield comes in at 1.69%.
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&#39;s holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
For PRF, it has heaviest allocation in the Financials sector --about 20.20% of the portfolio --while Information Technology and Healthcare round out the top three.
Looking at individual holdings, Berkshire Hathaway Inc accounts for about 2.30% of total assets, followed by Exxon Mobil Corp (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xom#NYSE">XOM</a>) and Microsoft Corp (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/msft#NASDAQ">MSFT</a>).
Its top 10 holdings account for approximately 16.93% of PRF&#39;s total assets under management.
Performance and Risk
So far this year, PRF has gained about 8.19%, and is up about 19.89% in the last one year (as of 06/13/2024). During this past 52-week period, the fund has traded between $30.37 and $38.58.
The ETF has a beta of 0.99 and standard deviation of 15.74% for the trailing three-year period, making it a medium risk choice in the space. With about 1014 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco FTSE RAFI US 1000 ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 1000 Value ETF (ARCA:IWD) tracks Russell 1000 Value Index and the Vanguard Value ETF (ARCA:VTV) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $54.84 billion in assets, Vanguard Value ETF has $115.35 billion. IWD has an expense ratio of 0.19% and VTV charges 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.
<a href="https://www.zacks.com/stock/news/2287628/is-invesco-ftse-rafi-us-1000-etf-prf-a-strong-etf-right-now?cid=CS-BENZ-FT-smart_beta_etf-2287628">To read this article on Zacks.com click here.</a>

While the S&amp;P 500 has been solid this year, truly impressive equity market performances can be found in developed markets outside the U.S. That sentiment applies to ex-U.S. smaller stocks. U.S. small-caps have confounded investors for much of this year while their international counterparts are surging.
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The PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio (NYSE: <a class="ticker" href="/stock/pdn#NYSE">PDN</a>), an oft-overlooked, smart beta spin on ex-US smaller stocks, is soaring as well. PDN, which holds mid- and small-caps from ex-US developed markets, is up 18.6 percent year-to-date. Combined, the year-to-date gains of the Russell 2000 Index and the S&amp;P MidCap 400 Index do not equal PDN&#39;s returns.
PDN can be viewed as small/mid-cap international equivalent of the $4.9 billion PowerShares FTSE RAFI US 1000 Portfolio (NYSE: <a class="ticker" href="/stock/prf#NYSE">PRF</a>), one of the ETFs that kick-started the smart beta movement when it debuted more than 11 years ago. PDN is seasoned as well as the ETF will celebrate its tenth birthday in September.
<h3>A Deeper Glance at PDN</h3>
PDN follows the FTSE RAFI Developed Markets ex-U.S. Mid-Small 1500 Index, which &ldquo;is designed to track the performance of small and mid capitalization equities of companies domiciled in developed international markets (excluding the US), selected based on the following four fundamental measures of firm size: book value, cash flow, sales and dividends,&rdquo; <a href="https://www.invesco.com/portal/site/us/financial-professional/etfs/product-detail?productId=PDN">according to PowerShares</a>.
PDN holds 1,504 stocks, or 115 less than reside in the MSCI EAFE Small Cap Index. As is the case with many ex-US developed markets strategies, PDN is heavily allocated to the industrial and consumer discretionary sectors. Those sectors combine for 42.5 percent of the ETF&#39;s weight.
The average market value of PDN&#39;s holdings is $3.28 billion, indicating the ETF leans toward mid-cap territory. PDN&#39;s price-to-earnings ratio is just over 20, implying a significant discount relative to the Russell 2000.
<h3>Geography Matters</h3>
Typically, diversified ex-US developed markets ETFs are heavy on Japan and the U.K. That is particularly true with PDN, which allocates over a third of its weight to Japanese stocks, a strategy that has been working this year <a href="https://www.benzinga.com/trading-ideas/long-ideas/17/07/9785779/theres-stellar-dividend-growth-found-in-japan">as smaller equities</a> in the world&#39;s third-largest economy have been surging.
PDN&#39;s weight to Japan is more than triple its U.K. exposure. Overall, 10 countries are represented in PDN, including six European nations. Canada is the PDN&#39;s only geographic weight not in Asia-Pacific or Europe.
Related Links:
<a href="https://www.benzinga.com/trading-ideas/long-ideas/17/07/9785779/theres-stellar-dividend-growth-found-in-japan">This Japan ETF Is Soaring</a>
<a href="https://www.benzinga.com/trading-ideas/long-ideas/17/07/9803648/keep-the-emerging-markets-lose-china-with-this-etf">A Different Emerging Markets ETF</a>

Smart beta exchange traded funds continue proliferating and playing pivotal roles in the staggering growth of the broader ETF space.
Institutional investors have been gravitating toward ETFs that focus on investment factors ranging from low volatility to momentum to value, a trend many industry observers and issuers expect will persist in the years ahead.
&quot;Asset managers have been advocating the usage of index-based products focused on minimum volatility, quality, momentum and other factors in recent years, suggesting that these were better ingredients for portfolio construction,&quot; said <a href="http://cfraresearch.com/">CFRA Research</a> Director of ETF &amp; Mutual Fund Research Todd Rosenbluth in a note out Tuesday. &quot;In recent months, some of them have taken the logical next step and put these smart beta products to use in their own kitchens.&quot;
Some are explicitly dedicated to multi-factor asset allocation under the umbrella of a single trade. That&#39;s the case with the PowerShares Growth Multi-Asset Allocation Portfolio (BATS: PSMG), which debuted in February. PSMG seeks <a href="https://www.benzinga.com/trading-ideas/long-ideas/17/02/9091612/powershares-launches-four-multi-asset-etfs">long-term capital appreciation</a> through diversification.
&quot;The Fund&#39;s target allocation of total assets: 60 percent to 80 percent in equity ETFs, 20 percent to 40 percent in fixed income ETFs and 20 percent to 30 percent in underlying ETFs that invest in foreign stocks and bonds,&quot; said PowerShares.
At its core, PSMG is an ETF of ETFs as all 14 of its components are other PowerShares ETFs. PSMG&#39;s holdings range in weights of almost 2.3 percent to 18.5 percent. The ETF&#39;s largest holdings are the Powershares FTSE RAFI US 1000 Portfolio (NYSE: <a class="ticker" href="/stock/prf#NYSE">PRF</a>), one of the godfathers of the smart beta phenomenon; PowerShares Russell Top 200 Pure Growth Portfolio (NYSE: <a class="ticker" href="/stock/pxlg#NYSE">PXLG</a>) and the PowerShares S&amp;P 500 Low Volatility Portfolio (NYSE: <a class="ticker" href="/stock/splv#NYSE">SPLV</a>).
&quot;According to Nick Kalivas, PowerShares senior equity product strategist, blending in low volatility products with PRF provides the ETFs with risk-managed diversification,&quot; said Rosenbluth.
CFRA does not yet have a rating on PSMG, but the research firm has an Overweight rating on SPLV, one of the largest low volatility ETFs. PSMG is actively managed and does not track an index. Five of the ETF&#39;s holdings are international funds, including emerging markets ETFs.

Invesco Ltd. (NYSE: <a class="ticker" href="/stock/ivz#NYSE">IVZ</a>)'s PowerShares unit, the fourth-largest U.S. issuer of exchange-traded funds, introduced four multi-asset ETFs Thursday.
The PowerShares Conservative Multi-Asset Allocation Portfolio (BATS: PSMC), an actively managed ETF, looks to deliver total returns with lower risk while featuring diversity among asset classes.
<h3>Diversity And Asset Classes</h3>
PSMC&#39;s &ldquo;target allocation of total assets: 50 percent to 80 percent in fixed income ETFs, 20 percent to 50 percent in equity ETFs and 5 percent to 10 percent in underlying ETFs that invest in foreign stocks and bonds as well as American depositary receipts (ADRs) and global depositary receipts (GDRs),&rdquo; <a href="https://www.invesco.com/portal/site/us/financial-professional/etfs/product-detail?productId=PSMC">according to PowerShares</a>.
<h3>A Few Examples</h3>
PSMC currently features 10 other PowerShares as its holdings, including popular fare such as the PowerShares Senior Loan Portfolio (NYSE: <a class="ticker" href="/stock/bkln#NYSE">BKLN</a>) and the Powershares FTSE RAFI US 1000 Portfolio (NYSE: <a class="ticker" href="/stock/prf#NYSE">PRF</a>), among others.
The PowerShares Moderately Conservative Multi-Asset Allocation Portfolio (BATS: PSMM) uses a moderately conservative investment approach that includes a &ldquo;target allocation of total assets: 50 percent to 80 percent in fixed income ETFs, 20 percent to 50 percent in equity ETFs and 5 percent to 15 percent in underlying ETFs that invest in foreign stocks and bonds as well as American depositary receipts (ADRs) and global depositary receipts (GDRs),&rdquo; according to PowerShares.
PSMM, which is also actively managed, holds several of the same ETFs found in PSMC, including BKLN, PRF and the PowerShares Fundamental High Yield Corporate Bond Portfolio (NYSE: <a class="ticker" href="/stock/phb#NYSE">PHB</a>).
The PowerShares Balanced Multi-Asset Allocation Portfolio (BATS: PSMB) look to deliver income and the potential for capital appreciation.
PSMB&#39;s &ldquo;target allocation of total assets: 50 percent to 70 percent in equity ETFs, 30 percent to 50 percent in fixed income ETFs and 10 percent to 25 percent in underlying ETFs that invest in foreign stocks and bonds,&rdquo; according to PowerShares. The ETF is also actively managed.
Related Link: <a href="https://www.benzinga.com/trading-ideas/long-ideas/17/01/8968972/advisors-continue-allocating-assets-to-etfs">Advisors Continue Allocating Assets To ETFs</a>
Six of PSMB&#39;s 10 holdings currently are PowerShares equity ETFs, including PRF and the PowerShares S&amp;P 500 Low Volatility Portfolio (NYSE: <a class="ticker" href="/stock/splv#NYSE">SPLV</a>). PSMB is also actively managed.
The PowerShares Growth Multi-Asset Allocation Portfolio (BATS: PSMG) seeks long-term capital appreciation through diversification.
&ldquo;The Fund&#39;s target allocation of total assets: 60 percent to 80 percent in equity ETFs, 20 percent to 40 percent in fixed income ETFs and 20 percent to 30 percent in underlying ETFs that invest in foreign stocks and bonds,&rdquo; said PowerShares.
Seven of PSMG&#39;s top 10 holdings are equity funds, including PRF and SPLV. The actively managed ETF charges 0.39 percent per year.
All four of the new ETFs trade on Bats, bringing the total of ETFs trading there to nearly <a href="http://finance.yahoo.com/news/bats-welcomes-four-powershares-funds-152700540.html">160 from 27 issuers</a>.

PowerShares Launches 4 Multi-Asset ETFs

Broadly speaking, U.S. stocks are not alarmingly expensive, but as one of the longest-running bull markets in history ages, investors are looking for other value destinations. Predictably, that includes ex-U.S. developed markets.
While there is a plethora of ex-U.S. developed markets exchange-traded funds on the market today, one of the more unique options for accessing developed world equities is the PowerShares FTSE RAFI Developed Markets (NYSE: <a class="ticker" href="/stock/pxf#NYSE">PXF</a>). PXF is the <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/07/8240348/an-old-school-smart-beta-etf-is-having-a-solid-year">developed market counterpart</a> to the popular PowerShares FTSE RAFI US 1000 (ETF) (NYSE: <a class="ticker" href="/stock/prf#NYSE">PRF</a>).
<h3>PXF's Index And Allocations</h3>
The $958 million PXF, which is 9.5 years old, tracks the FTSE RAFI Developed ex-U.S. Index. That benchmark &ldquo;is designed to track the performance of the largest developed market equities (excluding the US), selected based on the following four fundamental measures of firm size: book value, cash flow, sales and dividends. The equities with the highest fundamental strength are weighted according to their fundamental scores,&rdquo; <a href="https://www.invesco.com/portal/site/us/financial-professional/etfs/product-detail?productId=PXF">according to PowerShares</a>.
PXF is not an explicit value fund, maybe more incidental by contact, but it is hard to argue with the ETF&#39;s long-term results.
&ldquo;In addition, the fund holds growth stocks because its approach doesn&rsquo;t eliminate them completely, just has less exposure to them than market-cap-weighted strategies,&rdquo; said <a href="http://news.morningstar.com/articlenet/article.aspx?id=785989">Morningstar</a> in a recent note. &ldquo;This helps the portfolio maintain broad diversification. The fund doesn&rsquo;t constrain its country or sector weightings. So far, the approach has paid off. Since the fund&rsquo;s inception in June 2007 through November 2016, it has outpaced the foreign large-value Morningstar Category average by 58 basis points annually. Favorable exposure to the materials and utilities sectors contributed the most to its outperformance.&rdquo;
<h3>PXF Holdings And Exposures</h3>
PXF holds over 1,000 stocks and is a suitable replacement for traditional EAFE exposure as Japan and the U.K. combine for about 40 percent of the ETF&#39;s geographic lineup. France, Germany and Canada combine for another 26 percent.
PXF charges a reasonable 0.46 percent per year, or $46 per $10,000 invested. That fee is decent among its category peers and one that is supported by a low turnover ratio.
&ldquo;Even with this alternative weighting technique, the portfolio&rsquo;s average five-year turnover is only 16 percent, nearly one third of the category average. The strategy uses the five-year average for each fundamental metric to reduce turnover,&rdquo; noted Morningstar.
Seven of PXF&#39;s top 10 holdings trade on major U.S. exchanges.

The $4.2 billion PowerShares FTSE RAFI US 1000 (ETF) (NYSE: <a class="ticker" href="/stock/prf#NYSE">PRF</a>) debuted over a decade ago. Today, PRF is widely considered one of the forefathers of the booming smart segment of the exchange-traded funds industry.
<h3>Perfecting Old School With PRF</h3>
PRF follows the FTSE RAFI US 1000 Index, which employs four fundamental metrics: book value, cash flow, sales and dividends. The 1,000 stocks with the best fundamental strength make the cut for PRF&#39;s underlying index.
&ldquo;Since inception, PRF has posted a three-year rolling win rate of 78 percent over its benchmark, the Russell 1000 Index. That means that over three-year rolling windows, the underlying index has outperformed the Russell 1000 Index nearly 80 percent of the time,&rdquo; according to PowerShares.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/07/8235300/finding-value-in-bank-etfs">Finding Value In Bank ETFs</a></bzrelatedlink>
PRF <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/03/7773625/old-school-smart-beta-etf-enjoys-values-resurgence">has a small- and mid-cap cousin</a> that is delivering for investors this year: The PowerShares FTSE RAFI US 1500 Small-Mid (NYSE: <a class="ticker" href="/stock/prfz#NYSE">PRFZ</a>). Although it is home over $1.4 billion in assets under management, PRFZ is often overlooked relative to PRF. Such is the plight of an ETF that does not focus on large cap.
<h3>PRF's Cousin</h3>
However, PRFZ should not be overlooked. In what has been a good year for mid caps, PRFZ is higher by nearly 9 percent.
&ldquo;When this fund debuted back in September of 2006 there were critics abound in terms of this new concept to market known as &#39;Fundamental Indexing&#39; but judging from the asset levels attained by these two products as well as PRFZ&rsquo;s 3-star Morningstar ranking presently, the concept has been embraced rather well from the investing public. PRFZ does not trade a ton of daily volume, averaging only about 31,000 shares regularly, but we will see volume swells here and there on days where managers may be putting on or taking off larger positions in block size such as the recent inflow activity,&rdquo; said <a href="http://streetonefinancial.com/">Street One Financial</a> Vice President Paul Weisbruch in a note out Wednesday.
Like PRF, PRFZ emphasizes book value, cash flow, sales and dividends with small/mid-cap offering holding about 1,470 stocks. As is the case with many ETFs with value exposure, PRFZ features a significant weight to financial services stocks. PRFZ devotes 24.2 percent of its weight to that sector though the ETF&#39;s 7.4 percent weight to energy stocks is low relative to large-cap, traditional value ETFs. 
Since inception PRFZ&#39;s net asset value has outpaced the Russell 2000 Index, a widely followed small-cap benchmark, by nearly 200 basis points.
Did you like this article? Could it have been improved? Please email <a href="mailto:feedback@benzinga.com">feedback@benzinga.com</a> with the story link to let us know!

This year, investors are hearing plenty about the resurgence of the value factor and the reemergence of emerging markets equities and exchange-traded funds. On that note, it would appear logical that marrying those two themes would be rewarding.
The PowerShares FTSE RAFI Emerging Markets Portfolio (NYSE: <a class="ticker" href="/stock/pxh#NYSE">PXH</a>), the emerging markets cousin of the popular PowerShares FTSE RAFI US 1000 (ETF) (NYSE: <a class="ticker" href="/stock/prf#NYSE">PRF</a>), is up nearly 10.6 percent year-to-date. That is more than five times better than the MSCI Emerging Markets Index.
As is often the case in emerging markets, government looms large; however, that has been a positive for investors this year.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/04/7865127/buybacks-meet-spinoffs-and-value-stocks-in-this-new-etf">Buybacks Meet Spinoffs And Value Stocks In This New ETF</a></bzrelatedlink>
&ldquo;Emerging market government actions have also been constructive. The Indian government is seen as pro-growth, and there is hope that bad loans are finally being washed out of India&rsquo;s banking sector. In South America, Brazil could see President Dilma Rousseff impeached in the coming months, and the hope is that a new government will unleash positive growth policies and bolster investor confidence. The Brazilian market has begun to factor in these prospects, but Brazil&rsquo;s major stock market index, the Ibovespa, remains well off its 2008 highs,&rdquo; said PowerShares <a href="http://www.blog.invesco.us.com/are-emerging-market-stocks-about-to-turn-corner">in a note out Tuesday</a>.
<h3>Country Weights, Exposure</h3>
Brazilian and Indian stocks combine for 30 percent of PXH&#39;s weight. Brazil, Latin America&#39;s largest economy, is PXH&#39;s second-largest country weight behind China at 23.1 percent. PXH&#39;s Brazil weight is more than triple that of the MSCI Emerging Markets Index.
The ETF is also benefiting from <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/04/7813041/this-emerging-markets-etf-has-some-juice">rebounding Russian stocks</a>. PXH devotes more than 10 percent of its geographic weight to Russia, an allocation to that country that is more than double that of the MSCI Emerging Markets Index.
<h3>PXH As A Value ETF</h3>
PXH shares something in common with U.S.-focused value ETFs: significant dependence on the energy and financial services sectors as drivers of returns. This is not surprising when considering many emerging markets ETFs are chock full of state-controlled companies and those sectors have two of the largest concentrations of such firms. Financial services and energy names combine for nearly 56 percent of the ETF&#39;s weight.
&ldquo;From a valuation perspective, there&rsquo;s a lot to like about emerging market stocks. The forward price-to-earnings (P/E) ratio on the MSCI Emerging Markets Index was 12.6 at the end of March, compared with 17.4 in the US. That discount is below the -2.8 median forward P/E ratio spread seen since June 2005. There is a similar setup with the MSCI EAFE Index, where the emerging market forward P/E discount is below the median. Cheap emerging market valuations have been driven by political risks and weak economies. Some of these factors are starting to shift, which may improve valuations,&rdquo; added PowerShares.

Emerging markets exchange-traded funds are on the mend in 2016. Only time will tell how long that trend will last, but what is left of the emerging markets bull camp after several years of dour performances will likely reiterate that developing world equities are still nowhere close to previous highs and are still inexpensive on valuation.
Assuming the notion that there is more gas left in the tanks of emerging markets stocks and ETFs, investors might do well to evaluate different kinds of ETFs. That includes the PowerShares FTSE RAFI Emerging Markets Portfolio (NYSE: <a class="ticker" href="/stock/pxh#NYSE">PXH</a>). PXH is already delivering for investors, posting a year-to-date return of 12.3 percent, or better than double the returns offered by the MSCI Emerging Markets Index.
A simple way of looking at PXH is that as a fundamentally-weighted ETF, the fund is the emerging markets equivalent of the wildly popular PowerShares FTSE RAFI US 1000 (ETF) (NYSE: <a class="ticker" href="/stock/prf#NYSE">PRF</a>). PRF is widely seen as one of the ETFs that kick-started <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/03/7773625/old-school-smart-beta-etf-enjoys-values-resurgence">the smart beta movement</a>.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/news/16/04/7791200/brazil-from-the-ground-part-2-what-millennials-think-of-the-crisis">Brazil From The Ground, Part 2: What Millennials Think Of The Crisis</a></bzrelatedlink>
PXH competes with some other fundamentally-weighted emerging markets ETFs. This ETF&#39;s recipe boils down to an index where the member firms are &ldquo;selected based on the following four fundamental measures of firm size: book value, cash flow, sales and dividends. The equities with the highest fundamental strength are weighted according to their fundamental scores,&rdquo; according to <a href="https://www.invesco.com/portal/site/us/financial-professional/etfs/product-detail?productId=PXH&amp;title=powershares-ftse-rafi-emerging-markets-portfolio">PowerShares</a>.
<h3>China And Others</h3>
Like <a href="http://investorplace.com/2016/04/best-etfs-for-success-in-q2-fnde-sphd-xle/#.VwIFNnqqz3A">many emerging markets ETFs</a>, PXH features China as its largest country weight to the tune of 24.7 percent. However, PXH separates itself from cap-weighted rivals with significant overweights to two countries that were previously drags on emerging markets ETFs. PXH allocates 21.6 percent of its weight to Brazilian stocks and almost 9.7 percent to Russian stocks. Conversely, the MSCI Emerging Markets Index allocates barely more than 10 percent of its weight to those two BRIC members.
While the familiar criticism of smart beta ETFs is that when they outperform, they do so because of the value or small-cap factors, PXH faces other potential hurdles or catalysts depending upon one&#39;s point of view. Those being the ETF&#39;s large allocations to financial services and energy stocks.
Those sector allocations are hallmarks of U.S.-focused value ETFs, but in an emerging markets fund, it also means big exposure to state-controlled companies. PXH devotes over 55 percent of its weight to financial services and energy companies and more than half of the ETF&#39;s top 10 holdings are state-controlled firms.
Those controversial companies were previously burdens on emerging markets ETFs, but that theme is changing this year. The risk for PXH is that governments, particularly Brazil&#39;s, will give investors reasons to sour on state-run firms once again.
Image Credit: <a href="https://pixabay.com/en/woman-hand-earth-globe-europe-1262450/">Public Domain</a>

One of the earliest and most frequent criticism of alternatively-weighted exchange-traded funds is that when these funds outperform, it is often due to the value or small stocks factors or both.
That is a charge frequently aimed at the PowerShares FTSE RAFI US 1000 (ETF) (NYSE: <a class="ticker" href="/stock/prf#NYSE">PRF</a>), one of the forefathers of the smart or strategic beta ETF movement. In fact, the creators of PRF&#39;s underlying index, the FTSE RAFI US 1000 Index, probably would not deny that the value and small stocks factors are, in many cases, primary drivers of smart beta outperformance.
Yes, advisors and investors should understand why an ETF <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/03/7767189/a-value-etf-that-merits-further-examination">acts the way it does</a>, but there is such a thing as paralysis by analysis, and with the value factor rebounding this year, PRF is once again living up to its reputation as one of the premier broad market smart beta ETFs. While PRF&#39;s 1.1 percent year-to-date gain is not staggering, is about twice as good as that of the S&amp;P 500.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/03/6758695/an-etf-that-cements-the-case-for-smart-beta">An ETF That Cements The Case For Smart Beta</a></bzrelatedlink>
<h3>Smart Beta, Smart Investing?</h3>
&ldquo;As a footnote, we also see on the ETF sponsor&rsquo;s website that PRF was the 2015 winner of the &#39;William F. Sharpe Award for Product Of The Year,&#39; with William F. Sharpe of course being the originator of the commonly used &#39;Sharpe Ratio,&#39; which analyzes risk-adjusted performance across investment funds and methodologies. When we peel the orange so to speak, we see that the Financial sector has the largest weighting within PRF currently (by far), with a &gt;21 percent weighting present,&rdquo; said Street One Financial Vice President Paul Weisbruch in a note out Tuesday. 
<h3>Holdings And Allocations</h3>
PRF&#39;s weight to financial services stocks is more than 800 basis points above its weight to the energy sector, the ETF&#39;s second-largest sector allocation. Combined, the two sectors represent just over 34 percent of PRF&#39;s weight. That is not uncommon among value ETFs these days as several of PRF&#39;s&#39; rivals also feature energy and financial services names as their top two holdings at combined weights comparable to that of PRF.
PRF, which celebrated its tenth anniversary in December, is one of the ETFs that should be credited with bringing credibility and momentum to the smart/strategic beta ETF movement. A track record of more than a decade and $3.94 billion in assets under management confirm as much.
&ldquo;Since inception, PRF has posted a three-year rolling win rate of 78 percent over its benchmark, the Russell 1000 Index. That means that over three-year rolling windows, the underlying index has outperformed the Russell 1000 Index nearly 80 percent of the time,&rdquo; said PowerShares.

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Old School Smart Beta ETF Enjoys Value's Resurgence

The term &ldquo;smart beta,&rdquo; as it pertains to exchange-traded funds, has been derided by critics, but the success of some of the funds occupying this corner of the ETF landscape is undeniable.
According to FTSE Russell&rsquo;s first U.S. retail financial advisor market survey &ndash; <a href="http://www2.londonstockexchangegroup.com/advisor-smart-beta-survey">Smart Beta:</a> 2015 survey findings from U.S. financial advisors &ndash; 68 percent of financial advisors polled are using smart beta ETFs and 70 percent are using multiple strategic beta approaches.
<a href="http://www2.londonstockexchangegroup.com/advisor-smart-beta-survey">A recent survey</a> by Create-Research found that smart beta ETFs account for <a href="http://www.etftrends.com/2015/08/rapid-growth-in-the-smart-beta-index-etf-space/">over $300 billion</a>, or 18 percent of the U.S. ETF market, by far the largest ETF market in the world.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/02/6204751/pros-expect-smart-beta-etf-wave-to-keep-swelling">Pros Expect Smart Beta ETF Wave To Keep Swelling</a></bzrelatedlink>
The PowerShares FTSE RAFI US 1000 (ETF) (NYSE: <a class="ticker" href="/stock/prf#NYSE">PRF</a>), which celebrated its tenth anniversary in December, is one of the ETFs that should be credited with bringing credibility and momentum to the smart/strategic beta ETF movement. A track record of more than a decade and $3.75 billion in assets under management confirm as much.
<h3>Looking Closer At PRF</h3>
PRF was born in the days around the bursting of the technology, which torched many portfolios because the sector had become an excessive percentage of supposedly diversified broad market funds. At one point, during the halcyon days of the late 1990s/early 2000s tech bubble, the sector represented a third of the S&amp;P 500.
&ldquo;As the dust settled following the collapse of the technology bubble, PowerShares recognized the shortcomings of market-cap weighting. To address this issue, PowerShares began laying the groundwork for a lineup of ETFs that combined attributes of both passive indexes and active management. Originally called &#39;intelligent indexes,&#39; this suite served as the genesis for what would later become known as &ldquo;smart beta&rdquo; strategies.
&ldquo;Based upon objective, rules-based index methodologies, these strategies break the link between price and portfolio weight in the index construction process and employ a systematic rebalancing mechanism that serves to remove investor behavioral biases and emotion from the investment process,&rdquo; <a href="http://www.blog.invesco.us.com/smart-beta-investing-strategy">according to a new note</a> from the issuer.
Today, PRF, which holds nearly 1,000 stocks, allocates over 20 percent of its weight to financial services stocks while six sectors command weights of 10 percent to 12.2 percent. PRF&#39;s underlying benchmark, the FTSE RAFI US 1000 Index, is comprised of stocks &ldquo;selected based on the following four fundamental measures of firm size: book value, cash flow, sales and dividends,&rdquo; <a href="https://www.invesco.com/portal/site/us/financial-professional/etfs/product-detail?productId=PRF&amp;title=powershares-ftse-rafi-us-1000-portfolio">according to PowerShares</a>.
A frequent criticism of smart beta ETFs, one PRF has endured, is that they either overemphasize the value factor or the small-stock factor. About half of PRF&#39;s holdings can by considered value stocks but less than 6 percent are small-caps.
Regardless, it would be foolish to dismiss the ETF&#39;s long-term returns.
&ldquo;Since inception, PRF has posted a three-year rolling win rate of 78 percent over its benchmark, the Russell 1000 Index. That means that over three-year rolling windows, the underlying index has outperformed the Russell 1000 Index nearly 80 percent of the time,&rdquo; said PowerShares.
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Given all the talk about market volatility this year, it might be surprising for some investors to learn that the momentum factor has outpaced the value factor.

	For example, the Russell 1000 Value Index is being soundly thumped by the S&amp;P 500 and the Russell 1000 Growth Index. Taking the comparisons even further, investors can parse through the world of exchange funds and find a number of growth and/or momentum offerings that are easily beating value equivalents. A good example is the PowerShares Dynamic Large Cap Value Portfolio (NYSE: <a class="ticker" href="/stock/pwv#NYSE">PWV</a>) being down 6.8 percent year-to-date while the PowerShares DWA Momentum Portfolio (NYSE: <a class="ticker" href="/stock/pdp#NYSE">PDP</a>) is off just 0.4 percent.

	Part of the value factor&#39;s problem this year has been the Federal Reserve. Financial services and utilities names are value residents and those sectors have been plagued by speculation regarding when the Fed will raise interest rates or if the central bank can even make that move anymore. When Treasury yields climbed, financials got a lift, but utilities were hampered. The opposite was true when yields fell, but the result has been less-than-impressive performances for sector ETFs tracking financials services <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/10/5889362/sleepy-studs-utilities-etfs-look-to-extend-q3-brightness">and utilities stocks</a>.

	&ldquo;Value stocks tend to find favor when interest rates are rising. This makes sense then you consider that rates often rise behind strong economic growth, which typically benefit cyclical sectors like energy, industrials and financials. We have been in a zero interest rate environment since 2008, but given the correlation between value shares and interest rates, it would stand to reason that value shares could benefit should the Federal Reserve decided to take a less accommodative approach to monetary policy,&rdquo; said <a href="http://www.blog.invesco.us.com/economic-conditions-favor-value-stocks">Invesco PowerShares</a>, the fourth-largest U.S. ETF issuer, in a note out Wednesday.

	Although the aforementioned PWV, a $957.3 million ETF, has struggled this year, that fund has the potential to be a solid rising rates play. While PWV allocates a combined 21.5 percent of its weight to rate-sensitive utilities, telecom and consumer staples stocks, historically three of the worst-performing sectors following Fed liftoff, PWV&#39;s cyclical exposure is robust enough to endure rising rates. For example, the ETF devotes a <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/09/5832788/these-sector-etfs-could-shine-after-a-rate-hike">combined 36 percent</a> of its weight to technology, energy and consumer discretionary names.

	&ldquo;It&rsquo;s been a rough ride for value investors, but there is reason for optimism. Within the consumer discretionary sector, analysts surveyed by Bloomberg are expecting strong third-quarter earnings growth from retailers and automakers to the tune of 14.0% and 30.2%, respectively, while the real estate industry is expected to provide a boost to financial stocks,&rdquo; adds Invesco PowerShares.

	Consumer discretionary is this year&#39;s top-performing sector with a healthy lead over second-place healthcare. Investors looking to access discretionary stocks via a broad market ETF with a value tilt can consider the $4.1 billion PowerShares FTSE RAFI US 1000 Portfolio (NYSE: <a class="ticker" href="/stock/prf#NYSE">PRF</a>).

	Viewed in some circles as <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/09/5871033/the-survey-says-advisors-love-smart-beta-etfs">one of the godfathers</a> of the smart or strategic beta movement, PRF selects its 1,000-plus holdings based on book value, cash flow, sales and dividends. Consumer discretionary is PRF&#39;s third-largest sector allocation at a weight of 11.6 percent.

	PRF has outpaced the S&amp;P 500 in four of the past six years.

Intraday Update

PowerShares DWA Technical Leaders Portfolio

PowerShares Exchange Traded Fund Trust Dynamic Large Cap Value Portfolio

Value ETFs May Get Their Day In The Sun

Assailed and derided because some critics simply do not like the implications of the term &ldquo;smart beta,&rdquo; smart or strategic beta exchange traded funds continue to make significant inroads with financial advisors.

	According to FTSE Russell&rsquo;s first U.S. retail financial advisor market survey - <a href="http://www2.londonstockexchangegroup.com/advisor-smart-beta-survey">Smart Beta:</a> 2015 survey findings from U.S. financial advisors - 68 percent of financial advisors polled are using smart beta ETFs and 70 percent are using multiple strategic beta approaches.

	<a href="http://www2.londonstockexchangegroup.com/advisor-smart-beta-survey"> </a>

	<a href="http://www2.londonstockexchangegroup.com/advisor-smart-beta-survey">A recent survey</a> by Create-Research found that smart beta ETFs account for&nbsp;<a href="http://www.etftrends.com/2015/08/rapid-growth-in-the-smart-beta-index-etf-space/">over $300 billion</a>, or 18 percent of the U.S. ETF market, by far the largest ETF market in the world.

	The demographics of advisors using strategic beta ETFs are telling.

	&ldquo;Advisors utilizing smart beta products tend to be younger, have a higher share of AUM in ETFs and alternative investments, and have practices which extend beyond the core activities of investment selection, asset allocation and financial planning,&rdquo; <a href="http://www.ftse.com/products/home">according to FTSE Russell</a>.

	Smart beta ETFs are broadly defined as those funds that do not adhere to market capitalization weighting. FTSE Russell, the combination of FTSE Group&#39;s indexing business and Russell Indexes, is one of the largest purveyors of fundamentally-weighted indexes. In fact, some of the ETFs that started the smart beta movement track FTSE indexes.

	For example, the PowerShares FTSE RAFI US 1000 Portfolio (NYSE: <a class="ticker" href="/stock/prf#NYSE">PRF</a>), which is home to nearly $4 billion in assets under management and will celebrate its 10th anniversary later this year, tracks a FTSE index.

	PRF&#39;s underlying index &ldquo;is designed to track 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,&rdquo; <a href="https://www.invesco.com/portal/site/us/financial-professional/etfs/product-detail?productId=PRF">according to PowerShares</a>.

	Equal-weight ETFs are among the most popular smart beta strategies and that methodology has benefited some new funds. For example, the PowerShares Russell 1000 Equal Weight Portfolio (NYSE: <a class="ticker" href="/stock/eqal#NYSE">EQAL</a>) debuted in late 2014 and has nearly $142 million in assets under management. EQAL, which tracks a Russell index, takes equal-weighting a step further by applying the methodology to its individual holdings as well as the nine sectors represented in the fund.

	&ldquo;Advisors are most likely to use a smart beta approach that weights companies by historical dividend yield, with 36% adopting this type of smart beta investment product and 35% interested in using it,&rdquo; said FTSE Russell. &ldquo;High quality (27%), equal weight (26%) and fundamental (23%) are the next most widely used smart beta investment products after dividend.&rdquo;

	FTSE Russell has a growing footprint in the dividend and quality indexing arena thanks in part to O&#39;Shares Investments, the ETF issuer run by &ldquo;Shark Tank&rdquo; star Kevin O&#39;Leary.

	FTSE Russell is the index provider behind the O&#39;Shares FTSE US Quality Dividend ETF (NYSE: <a class="ticker" href="/stock/ousa#NYSE">OUSA</a>), a dividend fund which has needed&nbsp;<a href="http://www.benzinga.com/trading-ideas/long-ideas/15/08/5778246/olearys-oshares-triples-the-size-of-its-etf-stable">just over two months</a> of trading to amass $25.6 million in assets under management. O&#39;Shares also turned to FTSE Russell for the Asian and European equivalents of OUSA, the O&#39;Shares FTSE Asia Pacific Quality Dividend ETF (NYSE: OASI) and the O&#39;Shares FTSE Europe Quality Dividend ETF (NYSE: OEUR), as well as the currency-hedged answers to those funds.

Dividends

EQAL

OUSA

The Survey Says Advisors Love Smart Beta ETFs

Exchange traded funds that are weighted by constituents' market capitalization dominate the world of equity-based ETFs. These ETFs are easy to understand and, in many cases, cost effective.

	That does not mean cap-weighted ETFs always offer the best returns and investors have increasingly sought alternatives to traditional cap-weighted fare.

	Recent news from Invesco's (NYSE: <a class="ticker" href="/stock/ivz#NYSE">IVZ</a>) PowerShares, the fourth-largest U.S. ETF sponsor, that its suite of fundamentally-weighted ETFs back by Research Affiliates indices crossed <a href="http://www.benzinga.com/trading-ideas/long-ideas/13/07/3738909/powershares-fundamental-etfs-top-5b-in-assets">$5 billion in assets under management</a> highlights the notion that investors are embracing new ways of thinking about ETFs.

	Fundamental ETFs come with some advantages, as S&amp;P Capital IQ points out.

	"Unlike a mutual fund where management only reveals part of its strategy, the rules for these ETFs are known to investors, offering transparency. Further the re-weightings are periodic, offering investors a lower cost alternative than a mutual fund as is described below. These ETFs allow investors to add exposure to stocks based on characteristics that appeal most to them, rather than hold the whole market," said S&amp;P Capital IQ in a new research note.

	The research firm has an Overweight rating on the nearly $2.2 billion PowerShares FTSE RAFI US 1000 Portfolio (NYSE: <a class="ticker" href="/stock/prf#NYSE">PRF</a>). PRF, which turns eight in December, tracks the FTSE RAFI US 1000 Index. That index ranks stocks based on book value, cash flow, sales and dividends.

	PRF holds 1,018 stocks, not 1,000 has a direct competitor in the form of the iShares Russell 1000 ETF (NYSE: <a class="ticker" href="/stock/iwb#NYSE">IWB</a>). One of the knocks on fundamentally-weighted ETFs is that they are pricier than their cap-weighted peers. PRF's annual expense ratio is 0.39 percent, not alarmingly higher, but still well above the 0.15 percent charged by IWB. That means an ETF such as PRF must consistently outperform its cheaper rivals to win the battle for investors' dollars.

	The data show PRF is winning. For the year-to-date period ending June 30, PRF's index was ahead of the Russell 1000 by nearly 300 basis points and over the past year, the margin was nearly 575 basis points, <a href="http://www.invescopowershares.com/products/overview.aspx?ticker=PRF">according to PowerShares data</a>.

	PRF's top sector weights are 22.4 percent to financial services and almost 12 percent to energy. Top-10 holdings include Exxon Mobil (NYSE: <a class="ticker" href="/stock/xom#NYSE">XOM</a>), Bank of America (NYSE: <a class="ticker" href="/stock/bac#NYSE">BAC</a>) and Verizon (NYSE: <a class="ticker" href="/stock/vz#NYSE">VZ</a>).

	S&amp;P Capital IQ also has an Overweight rating on the WisdomTree LargeCap Dividend Fund (NYSE: <a class="ticker" href="/stock/dln#NYSE">DLN</a>). Unlike some of its rivals that focus on <a href="http://www.benzinga.com/trading-ideas/long-ideas/13/04/3526701/these-etfs-could-benefit-from-apple-dividend-growth">stocks' dividend increase streaks</a>, DLN's "index is dividend weighted annually to reflect the proportionate share of the aggregate cash dividends each component company is projected to pay in the coming year."

	There are times when DLN's methodology subjects investors to some lag relative to ETFs that focus on dividend increase streaks. For example, the SPDR S&amp;P Dividend ETF (NYSE: <a class="ticker" href="/stock/sdy#NYSE">SDY</a>), which only includes stocks that have raised dividends for 25 consecutive years, is outpacing DLN this year.

	However, over the past three years, DLN is ahead of SDY by 700 basis points. DLN is also slightly cheaper with an annual expense ratio of 0.28 percent compared to 0.35 percent for SDY.

	DLN is diverse at the sector level with six groups – staples, technology, financials, health care, energy and industrials – receiving weights ranging from 15.4 percent at the top to 10.8 percent. Top-10 holdings include Exxon, AT&amp;T (NYSE: <a class="ticker" href="/stock/t#NYSE">T</a>) and Apple (NASDAQ: <a class="ticker" href="/stock/aapl#NASDAQ">AAPL</a>).

	For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

Short Ideas

After-Hours Center

AAPL

S&P Bullish on 2 Fundamentally-Weighted ETFs

Invesco's (NYSE: <a class="ticker" href="/stock/ivz#NYSE">IVZ</a>) PowerShares, the fourth-largest U.S. ETF issuer, announced Tuesday the PowerShares Fundamental suite of ETFs recently passed the $5 billion assets under management, underscoring the rising popularity of ETFs that use alternative methodologies to weighting by market capitalization.

	"Invesco PowerShares has been focused on providing investors with the broadest and most diverse family of ‘smart beta' ETFs since the firm was founded," said Andrew Schlossberg, head of global ETFs. "Invesco PowerShares pioneered Fundamentals Weighted ETFs introducing the first broad-based US 1000 portfolio back in 2005, followed by international portfolios in 2007, and the first fixed-income portfolio in 2010."

	PowerShares lists fundamentally-weighted ETFs in the U.S., Canada and Europe. Those funds are based on the Research Affiliates Fundamental Index methodology that includes the use of book value, cash flow, sales and dividends, to select and weight index members.

	Alternative weighting methodologies have proven increasingly popular with investors with non-market cap-weighted ETFs accounting for 42 percent of inflows to equity-based ETFs through the first four months of this year, according to BlackRock.

	More importantly, some of the PowerShares RAFI ETFs have <a href="http://www.benzinga.com/trading-ideas/long-ideas/13/05/3587943/two-top-ideas-among-fundamentally-weighted-etfs">outpaced their cap-weighted rivals</a>. For example, the PowerShares FTSE RAFI US 1000 Portfolio (NYSE: <a class="ticker" href="/stock/prf#NYSE">PRF</a>) is up 15.2 percent year-to-date compared to a 12.4 percent gain for the iShares Russell 1000 Index Fund (NYSE: <a class="ticker" href="/stock/iwb#NYSE">IWB</a>). PRF, which debuted in late 2005, has over $2 billion in assets.

	The $646.7 million PowerShares FTSE RAFI US 1500 Small-Mid Portfolio (NASDAQ: <a class="ticker" href="/stock/prfz#NASDAQ">PRFZ</a>) has outperformed assorted small- and mid-cap ETFs this year with a gain of 17.3 percent. PRF and PRFZ are considered the flagship funds in the PowerShares RAFI suite.

	PRF and PRFZ "have established five-year and since inception track records that demonstrated their effectiveness over varying market cycles. We believe the PowerShares Fundamental ETFs provide investors an important alternative to passive cap-weighted strategies, and also represent great value compared to actively managed portfolios when relative performance and fees are considered," said John Feyerer, head of product strategy &amp; research at Invesco PowerShares, in a statement.

	Other popular ETFs in the suite include the PowerShares FTSE RAFI Emerging Markets Portfolio (NYSE: <a class="ticker" href="/stock/pxh#NYSE">PXH</a>), which has nearly $323 million in AUM, and the PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio (NYSE: <a class="ticker" href="/stock/pxf#NYSE">PXF</a>). PXF has $543.3 million in AUM.

	For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

PowerShares Fundamental ETFs Top $5B in Assets

Here is the ETF Professor's ETF Watch List for Monday, July 1, 2013.

The iShares Silver Trust (NYSE: <a class="ticker" href="/stock/slv#NYSE">SLV</a>) should be in focus again.

Check in with the Consumer Staples Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlp#NYSE">XLP</a>).

Give the PowerShares FTSE RAFI US 1000 Portfolio (NYSE: <a class="ticker" href="/stock/prf#NYSE">PRF</a>) a look.

Emerging markets plays of the day: WisdomTree India Earnings Portfolio (NYSE: <a class="ticker" href="/stock/epi#NYSE">EPI</a>), PowerShares DWA Emerging Markets Technical Leaders Portfolio (NYSE: <a class="ticker" href="/stock/pie#NYSE">PIE</a>) and the iShares MSCI Taiwan Index Fund (NYSE: <a class="ticker" href="/stock/ewt#NYSE">EWT</a>).

Forex play of the day: ProShares UltraShort Euro (NYSE: <a class="ticker" href="/stock/euo#NYSE">EUO</a>).

Bond play of the day: PowerShares Senior Loan Portfolio (NYSE: <a class="ticker" href="/stock/bkln#NYSE">BKLN</a>).

Sector ETFs

Currency ETFs

Pre-Market Outlook

PowerShares DWA Emerging Markets Technical Leaders

ETFs to Watch July 1, 2013 (BKLN, EUP, PIE)

Through the first four months of 2013, global exchange traded products inflows totaled $79 billion with a fair amount of that total going to traditional, market capitalization-weighted products. However, alternative weighting methodologies are gaining traction with investors.

	Non-Market Cap weighted funds have captured 42 percent of Equity ETP flows YTD, more than two times their share of Equity assets. Key drivers in this category are Dividend Income with flows of $3.4bn in April - a new record monthly high - and $10.9bn YTD as well as Minimum Volatility with $2.5bn in April and $6.5bn YTD, <a href="http://www.benzinga.com/markets/bonds/13/05/3553630/bond-etf-inflows-surge-in-april#ixzz2TEMZb4NB">according to BlackRock</a>.

	Prying investors, both professionals and retail, away from cap-weighted ETFs can be tricky business. That much is proven by the fact that at this point, <a href="http://www.benzinga.com/analyst-ratings/analyst-color/13/04/3543131/equal-weight-etf-trounces-traditional-s-p-500-peers">it is widely known that the</a> Guggenheim S&amp;P 500 Equal Weight ETF (NYSE: <a class="ticker" href="/stock/rsp#NYSE">RSP</a>) has easily outpaced the SPDR S&amp;P 500 (NYSE: <a class="ticker" href="/stock/spy#NYSE">SPY</a>) over long time horizons. Yet, SPY has $139.6 billion in assets under management compared to $3.91 billion for RSP.

	However, RSP merely stands as one example of a non-cap weighted ETF. There are others that use more intricate, fundamental weighting methodologies that have recently delivered solid returns. Here are some of the top ideas from the world of fundamentally-weighted ETFs.

	PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio (NYSE: <a class="ticker" href="/stock/pxf#NYSE">PXF</a>) 
	The PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio is not quite a Japan ETF, but with Japanese stocks soaring this year, this ETF offers a nice advantage with a 22.4 percent weight to the world's third-largest economy.

	That is the good news. The potentially bad news is PXF, which has $543.7 million in AUM, has significant eurozone exposure through a combined 27 percent allocation to France, Germany, Italy and Spain. Perhaps another selling point with PXF is that the ETF offers exposure to <a href="http://www.benzinga.com/markets/bonds/13/02/3326834/mixed-etf-performances-for-some-aaa-rated-countries">four AAA-rated countries</a> those being Germany, Canada, Australia and Switzerland.

	PXF tracks the FTSE RAFI Developed Markets ex-U.S. Index, which selects constituents based on book value, cash flow, sales and dividends. Stocks are then weighted by their fundamental scores and the result is a top-10 lineup that includes BP (NYSE: <a class="ticker" href="/stock/bp#NYSE">BP</a>), Royal Dutch Shell (NYSE: RDS-A) and Vodafone (NYSE: <a class="ticker" href="/stock/vod#NYSE">VOD</a>). BP is the ETF's largest holding with an allocation of just 1.91 percent. PXF, which has an annual expense ratio of 0.45 percent, is up 8.8 percent year-to-date.

	PowerShares FTSE RAFI US 1000 Portfolio (NYSE: <a class="ticker" href="/stock/prf#NYSE">PRF</a>) 
	The PowerShares FTSE RAFI US 1000 Portfolio competes with the cap-weighted iShares Russell 1000 Index Fund (NYSE: <a class="ticker" href="/stock/iwb#NYSE">IWB</a>), a massive $7.6 billion ETF that has surged 15.5 percent year-to-date. That would imply challenging IWB is difficult. Well, PRF is no slouch with over $1.8 billion in AUM and a return of 17.3 percent this year.

	PRF tracks the FTSE RAFI US 1000 Index, which like the index tracked by PXF, weighs and scores constituents based on book value, cash flow, sales and dividends. That is an important factor for investors to consider because year-to-date, over the past year, the past three years and past five years, the FTSE RAFI US 1000 Index has outperformed the Russell 1000 and the S&amp;P 500, <a href="http://www.invescopowershares.com/products/overview.aspx?ticker=PRF">according to PowerShares data</a>.

	Eight of PRF's top-10 holdings are Dow components with Citigroup (NYSE: <a class="ticker" href="/stock/c#NYSE">C</a>) and Wells Fargo (NYSE: <a class="ticker" href="/stock/wfc#NYSE">WFC</a>) the outliers. Financial services is by far the largest sector weight at 21.5 percent, but energy, technology, staples, discretionary, industrials and health care all receive double-digit allocations. Exxon Mobil (NYSE: <a class="ticker" href="/stock/xom#NYSE">XOM</a>), Bank of America (NYSE: <a class="ticker" href="/stock/bac#NYSE">BAC</a>) and AT&amp;T (NYSE: <a class="ticker" href="/stock/t#NYSE">T</a>) are the only stocks in PRF with weights above two percent. PRF has annual fees of 0.39 percent.

Rydex ETF Trust Rydex S&P Equal Weight ETF

Two Top Ideas Among Fundamentally-Weighted ETFs

Invesco's (NYSE: <a class="ticker" href="/stock/ivz#NYSE">IVZ</a>) PowerShares unit, the fourth-largest U.S. ETF issuer, is slated to introduce the PowerShares Fundamental Emerging Markets Local Debt Portfolio (NYSE: PFEM) on Thursday.

	The PowerShares Fundamental Emerging Markets Local Debt Portfolio, which will charge an annual expense ratio of 0.5 percent, enters a corner of the ETF market <a href="http://www.benzinga.com/markets/bonds/13/03/3392195/market-vectors-em-bond-etf-tops-1-5b-in-aum">fraught with competition</a>.

	The new PowerShares ETF will tussle with popular emerging markets local currency bond funds such as the WisdomTree Emerging Markets Local Debt Fund (NYSE: <a class="ticker" href="/stock/eld#NYSE">ELD</a>). ELD is the second-largest actively managed ETF with $2.05 billion in assets under management.

	Other popular emerging markets bond funds with holdings denominated in local currencies include the $1.5 billion Market Vector Emerging Markets Local Currency Bond ETF (NYSE: <a class="ticker" href="/stock/emlc#NYSE">EMLC</a>) and the $645.3 million iShares Emerging Markets Local Currency Bond Fund (NYSE: <a class="ticker" href="/stock/lemb#NYSE">LEMB</a>).

	The new PowerShares fund will track a Research Affiliates index, the Citi RAFI Bonds Sovereign Emerging Markets Extended Local Currency Index, which screens constituents on the following factors: GDP, population, land area and energy use, <a href="http://www.indexuniverse.com/hot-topics/18671-powershares-to-launch-local-em-bond-etf.html">according to Index Universe</a>.

	PowerShares currently offers several ETFs based on fundamentally-weighted indexes provided by Research Affiliates, including the $1.82 billion PowerShares FTSE RAFI US 1000 Portfolio (NYSE: <a class="ticker" href="/stock/prf#NYSE">PRF</a>) and the $381.6 milllion PowerShares FTSE RAFI Emerging Markets Portfolio (NYSE: <a class="ticker" href="/stock/pxh#NYSE">PXH</a>).

	PowerShares already has a sizable footprint in the emerging markets bond ETF arena with the U.S. dollar-denominated PowerShares Emerging Markets Sovereign Debt Portfolio (NYSE: <a class="ticker" href="/stock/pcy#NYSE">PCY</a>). That ETF has $2.64 billion in assets.

	For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

Market Vectors Emerging Markets Local Currency Bond ETF

EMLC

LEMB

PowerShares Emerging Markets Sovereign  Portfolio

PowerShares EM Local Currency Debt ETF Debuts Thursday

As the exchange-traded products industry, just days removed from its 20th anniversary in the U.S., has continued to evolve so has the debate surrounding how ETFs are constructed. Cap-weighting, the methodology that is most pervasive across equity-based funds, is what many investors are most familiar. 

That concept is simple as it usually involves ranking an ETF's holdings by market value with the largest company in the fund garnering the biggest weight. For example, Exxon Mobil (NYSE: <a class="ticker" href="/stock/xom#NYSE">XOM</a>) is the largest U.S. oil company. Therefore it commands the largest weight in ETFs such as the Energy Select SPDR (NYSE: <a class="ticker" href="/stock/xle#NYSE">XLE</a>) and the Vanguard Energy ETF (NYSE: <a class="ticker" href="/stock/vde#NYSE">VDE</a>). 

The cap-weighting approach has served issuers well, allowing them to offer low-cost broad market and sector funds to investors. Using VDE and XLE as the examples again, those are the two lowest cost energy sector ETFs on the market today.

However, as Apple's (NASDAQ: <a class="ticker" href="/stock/aapl#NASDAQ">AAPL</a>) recent tribulations highlighted, there are <a href="http://www.benzinga.com/trading-ideas/long-ideas/13/01/3249669/apples-slide-highlights-advantages-of-equal-weight-etfs">alternatives to traditional cap-weighting that can also benefit investors</a>. 

Some ETF sponsors have taken to introducing equal-weight products. Other issuers sponsor funds that screen for stocks using <a href="http://www.benzinga.com/trading-ideas/long-ideas/13/01/3284663/under-the-hood-a-better-way-to-tech">growth and value factors</a> while some sponsors use dividend growth or yield as ways of building income funds.

In a new research note, S&amp;P Capital IQ examined several ETFs employing various methodologies while noting various approaches do have merit, but "investors and advisors need to understand the structure of the ETF they are considering, regardless of its role in a broader portfolio."

Among the ETFs discussed in the note are two of WisdomTree's (NASDAQ: <a class="ticker" href="/stock/wetf#NASDAQ">WETF</a>) most popular products, the WisdomTree Emerging Markets Equity Income Fund (NYSE: <a class="ticker" href="/stock/dem#NYSE">DEM</a>) and the WisdomTree Japan Hedged Equity Fund (NYSE: <a class="ticker" href="/stock/dxj#NYSE">DXJ</a>). DEM, which has seen its assets under management tally, jump to over $5.3 billion from $3 billion in about a year, competes with the popular Vanguard FTSE Emerging Markets ETF (NYSE: <a class="ticker" href="/stock/vwo#NYSE">VWO</a>) and the iShares MSCI Emerging Markets Index Fund (NYSE: <a class="ticker" href="/stock/eem#NYSE">EEM</a>).

S&amp;P Capital IQ notes DEM has an expense ratio of 0.63 percent, well above the 0.2 percent charged by VWO, and that partially leads to S&amp;P's Marketweight rating on DEM. However, DEM's results are hard to argue with. The fund, which tracks an index that is re-weighted annually based on paid dividends, has surged almost 18 percent in the past five years and currently sports a 30-day SEC yield of 3.91 percent, <a href="http://www.wisdomtree.com/etfs/fund-details.aspx?etfid=50">according to WisdomTree data</a>. 

S&amp;P has an Overweight rating on DXJ, which has seen its AUM total jump to over $2.6 billion from <a href="http://www.benzinga.com/trading-ideas/long-ideas/13/01/3264059/wisdomtree-japan-hedged-etfs-tops-2b-in-aum">$516 million in early December</a>. DXJ eschews traditional cap-weighting by focusing on two critical factors: Offering investors a hedge luctuations between the value of the U.S. dollar and the Japanese yen and building a portfolio of companies that derive the bulk of their revenue from outside of Japan.

The latter factor increases DXJ's leverage to a weak yen and the recent results have been stellar. DXJ is up 25 percent in the past 90 days while the cap-weighted iShares MSCI Japan Index Fund (NYSE: <a class="ticker" href="/stock/ewj#NYSE">EWJ</a>) is up just 9.6 percent.

S&amp;P Capital IQ also has overweight ratings on the PowerShares FTSE RAFI US 1000 Portfolio (NYSE: <a class="ticker" href="/stock/prf#NYSE">PRF</a>) and the PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio (NYSE: <a class="ticker" href="/stock/pxf#NYSE">PXF</a>). Both ETFs track indexes developed by Research Affiliates and are based on the following fundamental factors: Book value, cash flow, sales and dividends.

That methodology has worked over time. As of the end of 2012, $10,000 in invested in PRF at the end of 2005 would have been worth over $14,300, far outpacing the $13,265 offered by the S&amp;P 500 over the same time, <a href="http://www.invescopowershares.com/products/overview.aspx?ticker=PRF">according to PowerShares data</a>.

PRF, which charges 0.39 percent per year, is home to over $1.58 billion in AUM and 991 stocks. Top holdings currently include Bank of America (NYSE: <a class="ticker" href="/stock/bac#NYSE">BAC</a>), General Electric (NYSE: <a class="ticker" href="/stock/ge#NYSE">GE</a>) and Citigroup (NYSE: <a class="ticker" href="/stock/c#NYSE">C</a>).

Regarding PXF, the fund is up about 10 percent in the past three months. The U.K., Japan and France combine for over 46 percent of the $502.8 million ETF's weight. PXF's 30-day SEC yield is a decent 3.74 percent. Top holdings among the 1,016 featured in the fund include HSBC (NYSE: <a class="ticker" href="/stock/hbc#NYSE">HBC</a>), BP (NYSE: <a class="ticker" href="/stock/bp#NYSE">BP</a>) and Total (NYSE: <a class="ticker" href="/stock/tot#NYSE">TOT</a>).

For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

Forex

WisdomTree Trust Japan Total Dividend Fund

WETF

S&P Weighs Merits of Various ETF Compositions

<img class="alignleft size-full wp-image-6631" title="five" src="http://etfdailynews.com/blog/wp-content/uploads/2009/10/five.jpg" alt="" width="110" height="110" />The PowerShares FTSE RAFI U.S. 1000 Portfolio (NYSE: <a class="ticker" href="/stock/prf#NYSE">PRF</a>) recently passed its five year milestone, a period during which the fundamentally-weighted product outperformed many more(...) Read the rest of <a href="http://etfdailynews.com/blog/2011/01/12/rafi-etf-turns-five-celebrates-results-prf-prfz-pxh-pxf-pdn-paf-rals-iwb/">RAFI ETF Turns Five, Celebrates Results (PRF, PRFZ, PXH, PXF, PDN, PAF, RALS, IWB)</a> 
Copyright 2010 ETFDAILYNEWS.COM 
The copying, republication or redistribution of ETFDailyNews Content, including by framing or similar means, is expressly prohibited without the prior written consent of ETFDailyNews.
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<a href="http://www.ino.com/info/205/CD3765/&amp;dp=0&amp;l=0&amp;campaignid=9"><img src="http://ino.directtrack.com/42/3765/205/" alt="" border="0" /></a></center>

RAFI ETF Turns Five, Celebrates Results (PRF, PRFZ, PXH, PXF, PDN, PAF, RALS, IWB)

The other day <a href="http://www.indexuniverse.com/hot-topics/8640-rafi-based-prf-5-yr-returns-near-twice-sap.html">IndexUniverse noted</a> that the PowerShares FTSE RAFI US 1000 Portfolio (<a class="ticker" href="/stock/prf#">PRF</a>) celebrated its fifth anniversary. The article also noted that the fund had doubled the return of the S&amp;P 500 since its inception returning 23.1% versus 11.99% for the S&amp;P 500--those numbers include dividends.
When PRF first listed I wrote <a href="http://www.thestreet.com/story/10260934/1/large-cap-etf-has-smaller-cap-leanings.html">this article</a> about it for TheStreet.com. I drew a conclusion about the fund that seemed odd but still it is what I saw; to me this struck me as looking a lot like the Russell 2000 in terms of comparing the back test to other indexes. Upon publishing this article Rob Arnott, the brains behind the RAFI process, called my house to tell me I was wrong. What could I say?
As time went on the correlation between PRF and the Russell 2000 seemed to persist. I mentioned this later on the blog and long time reader RW suggested I look at the Russell 1000 Value Index which is tracked by an ETF with ticker IWD. This of course made sense and I hadn't thought about it since that last blog post.
<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/_7ZckZ-8naz0/TSu5Wzj1d-I/AAAAAAAADv0/EDtuSpYaJP4/s1600/PRF.JPG"><img style="float: left; margin: 0pt 10px 10px 0pt; cursor: pointer; width: 320px; height: 178px;" src="http://2.bp.blogspot.com/_7ZckZ-8naz0/TSu5Wzj1d-I/AAAAAAAADv0/EDtuSpYaJP4/s320/PRF.JPG" alt="" id="BLOGGER_PHOTO_ID_5560741966367782882" border="0" /></a>I hadn't looked at the fund in quite a while but the IU article made me curious to see what the fund had done. Five years is not insignificant. Long term holders appear to have gotten a small cap effect. I'm sure anyone who has held the fund would not complain as PRF has delivered a superior result to SPY or IWD and for the trailing twelve months PRF looks a lot like IWD but this just seems like a weird thing to me.
The small cap effect could easily be just my seeing what I want to see but it I think it could be argued that PRF seems to take on different characteristics at different times. This is a fundamentally weighted index fund. Other fundamentally weighted index fund providers include RevenueShares and WisdomTree. This makes me wonder if any of their broad based funds do something like this.
To the extent this blog is about process, process sometimes includes stumbling across what might be an anomaly and trying to figure it out. For now I have no conclusions just an ongoing observation that I'm still trying to sort out. Any ideas? 
<div class="blogger-post-footer"><img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/8532070-7465147261943589586?l=randomroger.blogspot.com' alt='' /></div>

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