PIMCO RAFI ESG U.S. ETF

PIMCO RAFI ESG U.S. ETF (RAFE) tracks the RAFI ESG US Index. The index holds about 287 large and mid-size U.S. stocks and sizes each one by its business (sales, cash flow, dividends and book value) rather than its market value. It then tilts toward companies with better ESG scores and leaves out fossil fuels, tobacco, gambling and weapons. Its 0.29% expense ratio is higher than all eight similar funds compared, which average 0.12%.

• Over the year to Oct 27, 2026, RAFE returned +22.9%, 3rd of 9 among similar funds.
• Its 5-year annualized return was +11.9%.
• Its worst full calendar year was 2022 (-13.8%); its best was 2023 (+18.8%).
• The deepest fall in its price history was 24.3% (Jan 4, 2022 to Oct 12, 2022), recovered by Dec 26, 2023.

As of Jun 30, 2026, the fund held 291 securities; the ten largest made up 27.39% of assets.

By sector

• Over the three months to Jun 30, 2026, investors added a net $13.7M (creations minus redemptions, per the N-PORT report).
• Monthly total returns reported for that quarter: +7.45%, +5.66%, +1.78%.

RAFE is an index fund. PIMCO aims to match the return, before fees, of the RAFI ESG US Index, which is built by RAFI Indices, LLC. The fund keeps at least 80% of its assets in the index's stocks and generally holds each one in about the same proportion as the index. The index is called "smart beta": it follows fixed rules but does not weight companies by market value. Instead it uses the Fundamental Index approach. Each company's weight comes from four measures: five-year averages of sales (scaled down for companies funded heavily by debt), operating cash flow, and dividends plus buybacks, plus its latest book value. Only companies in the top 86% of that combined weight qualify.

Then the ESG screens apply. ESG stands for environmental, social and governance. Vigeo Eiris, an outside ratings firm, scores companies on environment, social, governance and gender diversity. RAFI adds a financial discipline score that favors profitable companies that spend and issue new shares sparingly. For each of these five signals, the bottom 10% of companies are dropped. Companies with major involvement in tobacco, gambling, weapons, fossil fuels, coal, tar sands or oil shale are also excluded. The weights that remain are adjusted by each company's overall ESG score. As of September 30, 2026, the index held 287 stocks.

The index is rebuilt every March and rebalanced in four staggered parts. Each quarter only one-quarter of the index is reset, which spreads out trading. Portfolio turnover was 21%.

• RAFE charges 0.29% a year, versus an average of 0.12% for the similar funds below (9th of 9, cheapest first).
• Using the prospectus's standard example, $10,000 invested would cost about $30 in the first year and $368 over 10 years (assuming a 5% annual return).

It holds about 290 large and mid-size U.S. stocks across most sectors, so it could serve as the main U.S. stock position for investors who want ESG screens, though its cost and small size are drawbacks.

RAFE spreads money across a broad mix of U.S. companies. Its largest positions were Apple at 4.9%, Microsoft at 3.7% and UnitedHealth at 3.5% as of June 30, 2026. The fund launched in December 2019, so it has no 2008 record. Its worst quarter was the first quarter of 2020, when it lost 25.64%. In the 2022 bear market it fell 24.3% between January 4 and October 12, 2022. It got back to its old peak on December 26, 2023, about 14.5 months after the low. Its worst calendar year was 2022, at -13.84%. Someone who had to sell shares for living costs during that stretch would have locked in losses. The trailing yield was 1.47% as of October 27, 2026, paid quarterly, so the income is modest. Under the SEC's standard example, $10,000 would cost $368 in fees over 10 years. Past results don't predict the future, and a plan should look at the whole portfolio, not one fund.

Matched by holdings overlap from the latest N-PORT reports.