The Invesco RAFI Emerging Markets ETF (PXH) made its debut on 09/27/2007, and is a smart beta exchange traded fund that provides broad exposure to the Broad Emerging Market ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Managed by Invesco, PXH has amassed assets over $1.92 billion, making it one of the larger ETFs in the Broad Emerging Market ETFs. This particular fund, before fees and expenses, seeks to match the performance of the FTSE RAFI Emerging Markets Index.
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.
Operating expenses on an annual basis are 0.47% for PXH, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 4.34%.
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, Taiwan Semiconductor Manufacturing Co Ltd (Y84629107) accounts for about 6.11% of the fund's total assets, followed by Petroleo Brasileiro Sa - Petrobras (PETR4) and Alibaba Group Holding Ltd.
The top 10 holdings account for about 29.27% of total assets under management.
Performance and Risk
The ETF return is roughly 10.81% and is up roughly 29.18% so far this year and in the past one year (as of 06/24/2026), respectively. PXH has traded between $23.28 and $29.97 during this last 52-week period.
PXH has a beta of 0.55 and standard deviation of 17.38% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 401 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 Emerging Markets Stock Index Fund ETF Shares (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 Emerging Markets Stock Index Fund ETF Shares has $121.18 billion in assets, iShares Core MSCI Emerging Markets ETF has $157.81 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
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Invesco RAFI Emerging Markets ETF (PXH): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).