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PRFZ targets small and mid-cap exposure using fundamental indexing

Through July 2026, the Russell 2000 climbed more than 40%, supporting renewed interest in small-caps via the Invesco RAFI US 1500 Small-Mid ETF.

Reported · Written up by our desk · ETFs

Small- and mid-cap stocks have rebounded in 2026 as mega-cap tech concentration has pushed broad U.S. valuations toward historic highs, driving investors to alternative growth exposures, ETF Trends reports.

Invesco RAFI US 1500 Small-Mid ETF, ticker PRFZ, is designed to capture small-cap momentum while pairing small-cap exposure with midcaps that are further along in their business maturation cycle. The fund tracks the FTSE RAFI US 1500 Small-Mid Index.

ETF Trends also highlights Research Affiliates’ view that large-cap valuations are demanding, with the U.S. Shiller CAPE ratio rising past 40 and nearing tech-bubble peaks. That valuation backdrop is expected to weigh on projected long-term returns for cap-weighted benchmarks like the S&P 500.

The article notes a key differentiator for PRFZ versus broad small-cap indexes such as the Russell 2000, which can include a high concentration of unprofitable or over-leveraged companies. PRFZ uses a fundamentally weighted approach based on four core accounting measures to size and select companies, aiming to avoid overvalued, speculative names that lack earnings support.

Latest closeS&P 500 7,765.36 ▼0.5%|Russell 2000 2,794.13 ▲0.0%|FTSE 100 10,441.60 ▼0.2%

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