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Is Invesco FTSE RAFI Developed Markets ex-U.S. ETF (PXF) a Strong ETF Right Now?
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Designed to provide broad exposure to the World ETFs category of the market, the Invesco FTSE RAFI Developed Markets ex-U.S. ETF (PXF - Free Report) is a smart beta exchange traded fund launched on 06/25/2007.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
A good option for investors who believe in market efficiency, market cap weighted indexes offer 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.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by Invesco. PXF has been able to amass assets over $1.62 billion, making it one of the larger ETFs in the World ETFs. PXF seeks to match the performance of the FTSE RAFI Developed ex-U.S. Index before fees and expenses.
The FTSE RAFI Developed ex U.S. 1000 Index is designed to track the performance of the largest developed market equities, excluding the US, 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.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.45%.
PXF's 12-month trailing dividend yield is 3.22%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, Shell Plc (SHEL - Free Report) accounts for about 2.34% of total assets, followed by Totalenergies Se (TTE - Free Report) and Bp Plc (BP/).
PXF's top 10 holdings account for about 11.73% of its total assets under management.
Performance and Risk
Year-to-date, the Invesco FTSE RAFI Developed Markets ex-U.S. ETF return is roughly 13.08% so far, and is up about 25.40% over the last 12 months (as of 07/17/2023). PXF has traded between $35.01 and $46.31 in this past 52-week period.
The fund has a beta of 0.90 and standard deviation of 17.88% for the trailing three-year period, which makes PXF a medium risk choice in this particular space. With about 1048 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco FTSE RAFI Developed Markets ex-U.S. ETF is a reasonable option for investors seeking to outperform the World ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Total International Stock ETF (VXUS - Free Report) tracks FTSE Global All Cap ex US Index and the Vanguard FTSE Developed Markets ETF (VEA - Free Report) tracks FTSE Developed All Cap ex US Index. Vanguard Total International Stock ETF has $58.68 billion in assets, Vanguard FTSE Developed Markets ETF has $116.31 billion. VXUS has an expense ratio of 0.07% and VEA charges 0.05%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the World 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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Is Invesco FTSE RAFI Developed Markets ex-U.S. ETF (PXF) a Strong ETF Right Now?
Designed to provide broad exposure to the World ETFs category of the market, the Invesco FTSE RAFI Developed Markets ex-U.S. ETF (PXF - Free Report) is a smart beta exchange traded fund launched on 06/25/2007.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
A good option for investors who believe in market efficiency, market cap weighted indexes offer 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.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by Invesco. PXF has been able to amass assets over $1.62 billion, making it one of the larger ETFs in the World ETFs. PXF seeks to match the performance of the FTSE RAFI Developed ex-U.S. Index before fees and expenses.
The FTSE RAFI Developed ex U.S. 1000 Index is designed to track the performance of the largest developed market equities, excluding the US, 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.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.45%.
PXF's 12-month trailing dividend yield is 3.22%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, Shell Plc (SHEL - Free Report) accounts for about 2.34% of total assets, followed by Totalenergies Se (TTE - Free Report) and Bp Plc (BP/).
PXF's top 10 holdings account for about 11.73% of its total assets under management.
Performance and Risk
Year-to-date, the Invesco FTSE RAFI Developed Markets ex-U.S. ETF return is roughly 13.08% so far, and is up about 25.40% over the last 12 months (as of 07/17/2023). PXF has traded between $35.01 and $46.31 in this past 52-week period.
The fund has a beta of 0.90 and standard deviation of 17.88% for the trailing three-year period, which makes PXF a medium risk choice in this particular space. With about 1048 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco FTSE RAFI Developed Markets ex-U.S. ETF is a reasonable option for investors seeking to outperform the World ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Total International Stock ETF (VXUS - Free Report) tracks FTSE Global All Cap ex US Index and the Vanguard FTSE Developed Markets ETF (VEA - Free Report) tracks FTSE Developed All Cap ex US Index. Vanguard Total International Stock ETF has $58.68 billion in assets, Vanguard FTSE Developed Markets ETF has $116.31 billion. VXUS has an expense ratio of 0.07% and VEA charges 0.05%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the World 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.