Is Invesco FTSE RAFI Developed Markets exU.S. ETF (PXF) a Strong ETF Right Now?
The Invesco FTSE RAFI Developed Markets exU.S. ETF (PXF) made its debut on 06/25/2007, and is a smart beta exchange traded fund that provides broad exposure to the Broad Developed World ETFs category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
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.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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
PXF is managed by Invesco, and this fund has amassed over $1.24 billion, which makes it one of the larger ETFs in the Broad Developed World ETFs. This particular fund, before fees and expenses, seeks to match the performance of the FTSE RAFI Developed ex-U.S. Index.
The FTSE RAFI Developed ex-U.S. 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
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.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.45%.
It's 12-month trailing dividend yield comes in at 2.31%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
When you look at individual holdings, Samsung Electronics Co Ltd accounts for about 1.57% of the fund's total assets, followed by Nestle Sa (NESN) and Bp Plc (BP/).
Its top 10 holdings account for approximately 10.14% of PXF's total assets under management.
Performance and Risk
Year-to-date, the Invesco FTSE RAFI Developed Markets exU.S. ETF has added roughly 15.15% so far, and was up about 36.78% over the last 12 months (as of 10/22/2021). PXF has traded between $34.17 and $50.38 in this past 52-week period.
PXF has a beta of 0.93 and standard deviation of 22.65% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 1052 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco FTSE RAFI Developed Markets exU.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) tracks FTSE Global All Cap ex US Index and the Vanguard FTSE Developed Markets ETF (VEA) tracks FTSE Developed All Cap ex US Index. Vanguard Total International Stock ETF has $51.45 billion in assets, Vanguard FTSE Developed Markets ETF has $105.44 billion. VXUS has an expense ratio of 0.08% 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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Invesco FTSE RAFI Developed Markets exU.S. ETF (PXF): ETF Research Reports
Vanguard FTSE Developed Markets ETF (VEA): ETF Research Reports
Vanguard Total International Stock ETF (VXUS): ETF Research Reports
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