Invesco RAFI Strategic US ETF (IUS) Crosses $1 Billion in AUM

Today’s equity markets are increasingly dominated by top-heavy, market-cap-weighted indices. In response, investors are actively seeking intelligent core strategies that balance broad market exposure with fundamental risk discipline. Highlighting this shifting demand, the Invesco RAFI Strategic US ETF (IUS B+) surpassed $1 billion in assets under management (AUM) this month. Launched in September 2018, IUS offers a compelling alternative for investors looking to navigate high market concentration.Key Takeaways: IUS surpassed $1 billion in assets under management. This comes as investors increasingly demand core strategies that counteract top-heavy market concentration. Tracking the Invesco Strategic US Index, the fund combines a fundamental business-size screen. This is based on five-year equally weighted averages of sales, operating cash flow, capital return, and book value. It also adds a quality screen targeting operational efficiency and growth. IUS weights constituents according to economic footprint rather than market capitalization. This breaks the link between price and portfolio weight to provide a disciplined, low-cost core allocation. See More: October Volatility Opens Door for RAFI StrategiesTwo-Pronged MethodologyUnlike traditional index funds that weight holdings based on market cap, IUS tracks the Invesco Strategic US Index (the “Index”), which employs a systematic, two-tier selection process. First, eligible securities are assigned a fundamental (Business-Size) score. This is based on a five-year, equally weighted average of four tangible economic metrics: sales, operating cash flow, total return of capital, and book value. For real estate securities specifically, funds from operations and total assets replace operating cash flow and book value. Securities ranking in the top 90% according to their fundamental metrics advance to the next stage. Second, the top 80% of those eligible candidates are selected based on a Quality score. It balances operational efficiency (the prior-year sales-to-assets ratio) and growth (the five-year percentage change in sales-to-assets). The final holdings are weighted by their float-adjusted Business-Size scores and reconstituted annually. This ensures portfolio allocations remain anchored to actual economic scale rather than speculative market sentiment and/or price momentum.Avoiding Market ConcentrationWith mega-cap technology names commanding unprecedented weight in broad market benchmarks, cap-weighted strategies systematically overweight overvalued companies while underweighting undervalued ones. This was a topic of discussion in a recent TMX VettaFi webcast where Ari Polychronopoulos, Head of RAFI™ Indices, noted that the Magnificent Seven has grown to represent nearly 35% of the S&P 500 with a combined market capitalization exceeding $20 trillion. That said, IUS effectively breaks this price-weight link, thereby providing diversification during a market environment marked by excessive market concentration. By combining fundamental size weighting with an explicit quality overlay, IUS mitigates concentration risk and also aims to provide a systematic “buy-low, sell-high” rebalancing mechanism. At a competitive net expense ratio of 0.19%, IUS serves as a resilient core allocation or a powerful complement to traditional cap-weighted strategies in today’s dynamic macroeconomic environment. For more news, information, and strategy, visit the Smart Beta Content Hub. VettaFi LLC (“VettaFi”) is the index provider for IUS, for which it receives an index licensing fee. However, IUS is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of IUS.