RAFI ETFs YTD: Boom Or Bust?

As the ETF industry continues to develop, many investors have begun to move away from the more “traditional” funds in favor of ETFs that employ unique methodologies that are aimed at delivering potentially higher returns. Of the most noteworthy and popular innovations has been the development of alternative weighting strategies, specifically the RAFI methodology [see 101 ETF Lessons Every Advisor Should Learn]. Several years ago, Research Affiliates, a global lead in innovative investing and asset allocation strategies, developed the fundamentally-weighted indexes that utilize the RAFI methodology. Now there are nearly 20 different exchange-traded products that are linked to RAFI-weighted indexes. But before taking a look at the performance of these popular funds, a fundamental understanding of the unique methodology is essential. Understanding RAFI The RAFI weighting methodology is relatively straightforward. While traditional cap-weighted indexes determine allocations based on market capitalization, RAFI funds take into account several fundamental factors to determine the weighting of an individual holding. [...] Click here to read the original article on ETFdb.com. Related Posts: PowerShares Launches Nine RAFI Style ETFs June ETF Roundup: Launches, Filings, and Closures ETF Insider: A Dead Cat Bounce? PowerShares Plans RAFI ETF Push RAFI ETF Turns Five, Celebrates Results