The Invesco RAFI Developed Markets ex-U.S. ETF (PXF) made its debut on 06/25/2007, and is a smart beta exchange traded fund that provides broad exposure to the Foreign Large Value ETF category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is sponsored by Invesco. It has amassed assets over $1.81 billion, making it one of the larger ETFs in the Foreign Large Value ETF. Before fees and expenses, this particular fund seeks to match the performance of the FTSE RAFI Developed ex-U.S. Index.
The RAFI Fundamental Select Developed ex US 1000 Index tracks the performance of the largest developed market equities, excluding the US, based on the following four fundamental measures of firm size: book value, cash flow, sales and dividends.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.45% for PXF, making it on par with most peer products in the space.
PXF's 12-month trailing dividend yield is 3.45%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Taking into account individual holdings, Shell Plc (SHEL) accounts for about 2.27% of the fund's total assets, followed by Hsbc Holdings Plc (HSBA) and Totalenergies Se (TTE).
Its top 10 holdings account for approximately 11.28% of PXF's total assets under management.
Performance and Risk
So far this year, PXF return is roughly 7.29%, and was up about 9.02% in the last one year (as of 04/16/2025). During this past 52-week period, the fund has traded between $46.22 and $54.25.
The fund has a beta of 0.78 and standard deviation of 16.98% for the trailing three-year period, which makes PXF a medium risk choice in this particular space. With about 1044 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco RAFI Developed Markets ex-U.S. ETF is a reasonable option for investors seeking to outperform the Foreign Large Value ETF segment of the market. However, there are other ETFs in the space which investors could consider.
Dimensional International Value ETF (DFIV) tracks ---------------------------------------- and the Schwab Fundamental International Equity ETF (FNDF) tracks Russell RAFI Developed ex US Large Co. Index (Net). Dimensional International Value ETF has $9.34 billion in assets, Schwab Fundamental International Equity ETF has $14.23 billion. DFIV has an expense ratio of 0.27% and FNDF charges 0.25%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Foreign Large Value ETF.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Invesco RAFI Developed Markets ex-U.S. ETF (PXF): ETF Research Reports Schwab Fundamental International Equity ETF (FNDF): ETF Research Reports TotalEnergies SE Sponsored ADR (TTE): Free Stock Analysis Report Dimensional International Value ETF (DFIV): ETF Research Reports Shell PLC Unsponsored ADR (SHEL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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