The Invesco RAFI Emerging Markets ETF (PXH) was launched on 09/27/2007, and is a smart beta exchange traded fund designed to offer broad exposure to the Broad Emerging Market ETFs category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
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
Because the fund has amassed over $1.95 billion, this makes it one of the larger ETFs in the Broad Emerging Market ETFs. PXH is managed by Invesco. This particular fund seeks to match the performance of the FTSE RAFI Emerging Markets Index before fees and expenses.
The RAFI Fundamental Select Emerging Markets 350 Index tracks the performance of the largest emerging market equities, selected based on the following four fundamental measures of firm size: book value, cash flow, sales and dividends.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.47%, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 3.70%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Taking into account individual holdings, Taiwan Semiconductor Manufacturing Co Ltd (Y84629107) accounts for about 5.91% of the fund's total assets, followed by Alibaba Group Holding Ltd and Petroleo Brasileiro Sa - Petrobras (PETR4).
Its top 10 holdings account for approximately 28.91% of PXH's total assets under management.
Performance and Risk
The ETF has added about 8.68% and it's up approximately 32.7% so far this year and in the past one year (as of 02/17/2026), respectively. PXH has traded between $18.80 and $28.56 during this last 52-week period.
The ETF has a beta of 0.54 and standard deviation of 16.81% for the trailing three-year period, making it a medium risk choice in the space. With about 395 holdings, it effectively diversifies company-specific risk .
Alternatives
Invesco RAFI Emerging Markets ETF is a reasonable option for investors seeking to outperform the Broad Emerging Market ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard FTSE Emerging Markets ETF (VWO) tracks FTSE Emerging Markets All Cap China A Inclusion Index and the iShares Core MSCI Emerging Markets ETF (IEMG) tracks MSCI Emerging Markets Investable Market Index. Vanguard FTSE Emerging Markets ETF has $115.32 billion in assets, iShares Core MSCI Emerging Markets ETF has $144.6 billion. VWO has an expense ratio of 0.06% and IEMG changes 0.09%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Broad Emerging Market ETFs
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 Emerging Markets ETF (PXH): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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