Fundamental Index ETFs

I do the “ETF of the Week” for MarketWatch every Thursday on Chuck Jaffe’s MoneyLife Show where I highlight big movers and disappointments within the exchange traded fund market.

This Thursday, I took a look at the PowerShares FTSE RAFI US 1000 Portfolio (NYSEArca: PRF). The fundamental RAFI indexing methodology helps investors diversify away from market-capitalization weighted index ETFs, which may help limit exposure to market speculation, bubbles and current fads.

PRF has a five-year annualized return of 10.9%, versus 7.8% for the S&P 500, according to Morningstar. [A Fundamentally-Weighted ETF Outperforming the Market]

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.