For instance, the PowerShares FTSE RAFI US 1000 Portfolio (NYSEArca: PRF) has shown periods of slightly mirroring the S&P 500’s performance. Over the past three years’ annualized returns, PRF gained 17.3% compared to the S&P’s 16.9%. Over a longer period of five years, PRF has outperformed, rising an annualized 10.2%, compared to the S&P’s annualized 7.2%.
“Given its small-cap and value tilts, PRF will likely underperform during market downturns and outperform during bull markets,” according to Morningstar analyst Alex Bryan. “It can also offer some protection against growth-oriented market bubbles.”
Investors can find enhanced index-based ETFs from Charles Schwab, First Trust, Guggenheim, PowerShares, RevenueShares and WisdomTree. Additionally, there are a number of dividend-oriented index ETFs provided by industry leaders like iShares, State Street and Vanguard. [Jaffe Weighs in on Schwab Fundamental ETFs]
For more information on fundamental methodologies, visit our indexing category.
Max Chen contributed to this article.