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Is Invesco FTSE RAFI Developed Markets ex-U.S. ETF (PXF) a Strong ETF Right Now?
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The Invesco FTSE RAFI Developed Markets ex-U.S. ETF (PXF - Free Report) was launched on 06/25/2007, and is a smart beta exchange traded fund designed to offer broad exposure to the Broad Developed World ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $1.61 billion, this makes it one of the larger ETFs in the Broad Developed World ETFs. PXF is managed by Invesco. 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.
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 3.28%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
When you look at individual holdings, Shell Plc (BP6MXD8) accounts for about 2.62% of the fund's total assets, followed by Totalenergies Se (B15C557) and Samsung Electronics Co Ltd.
The top 10 holdings account for about 12.65% of total assets under management.
Performance and Risk
The ETF return is roughly 12.55% so far this year and it's up approximately 12.60% in the last one year (as of 11/30/2023). In the past 52-week period, it has traded between $40.99 and $46.68.
The ETF has a beta of 0.90 and standard deviation of 17.07% for the trailing three-year period, making it a medium risk choice in the space. With about 1043 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 Broad Developed 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 $59.42 billion in assets, Vanguard FTSE Developed Markets ETF has $115.28 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 Broad Developed 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?
The Invesco FTSE RAFI Developed Markets ex-U.S. ETF (PXF - Free Report) was launched on 06/25/2007, and is a smart beta exchange traded fund designed to offer broad exposure to the Broad Developed World ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $1.61 billion, this makes it one of the larger ETFs in the Broad Developed World ETFs. PXF is managed by Invesco. 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.
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 3.28%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
When you look at individual holdings, Shell Plc (BP6MXD8) accounts for about 2.62% of the fund's total assets, followed by Totalenergies Se (B15C557) and Samsung Electronics Co Ltd.
The top 10 holdings account for about 12.65% of total assets under management.
Performance and Risk
The ETF return is roughly 12.55% so far this year and it's up approximately 12.60% in the last one year (as of 11/30/2023). In the past 52-week period, it has traded between $40.99 and $46.68.
The ETF has a beta of 0.90 and standard deviation of 17.07% for the trailing three-year period, making it a medium risk choice in the space. With about 1043 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 Broad Developed 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 $59.42 billion in assets, Vanguard FTSE Developed Markets ETF has $115.28 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 Broad Developed 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.