Designed to provide broad exposure to the Foreign Large Value ETF category of the market, the Invesco RAFI Developed Markets ex-U.S. ETF (PXF) is a smart beta exchange traded fund launched on 06/25/2007.
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.
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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other 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
Managed by Invesco, PXF has amassed assets over $2.87 billion, making it one of the larger ETFs in the Foreign Large Value ETF. PXF seeks to match the performance of the FTSE RAFI Developed ex-U.S. Index before fees and expenses.
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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.43% for PXF, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 3.09%.
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.
When you look at individual holdings, Samsung Electronics Co Ltd (Y74718100) accounts for about 4.51% of the fund's total assets, followed by Shell Plc (SHEL) and Totalenergies Se (TTE).
The top 10 holdings account for about 15.41% of total assets under management.
Performance and Risk
Year-to-date, the Invesco RAFI Developed Markets ex-U.S. ETF has gained about 18.64% so far, and it's up approximately 36.47% over the last 12 months (as of 07/07/2026). PXF has traded between $56.98 $78.91 in this past 52-week period.
PXF has a beta of 0.73 and standard deviation of 15.07% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 1039 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.
Vanguard International High Dividend Yield Index Fund ETF Shares (VYMI) tracks FTSE All-World ex US High Dividend Yield Index and the Schwab Fundamental International Equity ETF (FNDF) tracks Russell RAFI Developed ex US Large Co. Index (Net). Vanguard International High Dividend Yield Index Fund ETF Shares has $19.62 billion in assets, Schwab Fundamental International Equity ETF has $24.48 billion. VYMI has an expense ratio of 0.07% and FNDF changes 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
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Invesco RAFI Developed Markets ex-U.S. ETF (PXF): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).