January 12, 2011 at 07:00 AM EST
RAFI ETF Turns Five, Celebrates Results
The PowerShares FTSE RAFI U.S. 1000 Portfolio (PRF) recently passed its five year milestone, a period during which the fundamentally-weighted product outperformed many more popular market-cap weighted ETFs. PRF debuted in December 2005, and for the five year period ended December 31, 2010 it achieved a cumulative total return of 23.1% (based on NAV). That compared quite favorably to the more widely replicated Russell 1000 Index, which added about 12% during the same period. RAFI weighting has emerged as one of the more popular alternatives to market capitalization weighting in recent years, as the ETF boom has brought increased scrutiny to the manner in which indexes are constructed and maintained. Because weightings assigned in market cap indexes are linked directly to the stock price of underlying securities, there is a tendency to underweight undervalued securities and overweight overvalued stocks. The RAFI methodology breaks the link between stock price and index [...] Click here to read the original article on ETFdb.com. Related Posts: Does Your Portfolio Need A “RAFI ETF”? ProShares Launches Long/Short RAFI ETF This Week In ETFs: March 5th Edition Guide To Small Cap International ETFs Best Performing ETFs Of 2009
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