Exchange traded fund provider Invesco PowerShares Capital Management has marked the fifth anniversary of the PowerShares FTSE RAFI US 1000 Portfolio, the first retail product to guava investors access to the passive Research Affiliates Fundamental Index (RAFI) methodology.
This award-winning index methodology uses four fundamental measures of company size: book value, cash flow, sales and dividends, to select and weight index constituents. By using four fundamental factors rather than one, the RAFI methodology is thought to be a more robust means of capturing a company’s true economic footprint.
Since inception, the PowerShares FTSE RAFI US 1000 Portfolio has outperformed its market-cap-weighted benchmarks, the Russell 1000 and S&P 500 indexes. For the five-year period ending Dec. 31, 2010, PRF achieved a cumulative total return of 23.10% based on NAV, significantly outperforming the S&P 500 Index which had a total return of 11.99%. The Russell 1000 Index gained 13.81%, and the Russell 1000 Value Index had a cumulative total return of 6.68% over the same five-year period.
“We are very pleased to celebrate this five-year milestone for the PowerShares FTSE RAFI US 1000 Portfolio, which has delivered on its goal of providing investors improved risk-adjusted returns compared to cap-weighted benchmarks,” says Ben Fulton, Invesco PowerShares managing director of global ETFs. “Invesco PowerShares currently offers six equity ETFs based on the FTSE RAFI Fundamental Index methodology and each one is ranked in the top third of their Lipper categories. We believe the PowerShares ETFs based on this methodology represent an important alternative to cap-weighted portfolios. We look forward to working with Research Affiliates to continue to expand this important product suite.”