Invesco FTSE RAFI Developed Markets ex-U.S. ETF PXF should be a strong value strategy over the long run. Its fundamental weighting approach can be an advantage when valuations revert to their long-term averages. The fund earns a Morningstar Medalist Rating of Silver.

This ETF tracks the FTSE RAFI Developed ex US 1000 Index. It ranks stocks from the FTSE Developed All Cap ex US Index by sales, cash flow, dividends (if applicable), and book value, and includes the top 1,000. The index weights its final holdings by these same measures. During a rebalance, it increases the portfolio’s exposure to stocks that have become cheaper relative to these metrics while cutting back on those that have become more expensive.

This approach has some advantages. Steering the portfolio away from the most expensive stocks can help performance when the market enters a downturn. It also primes the fund to exploit cheap prices during the ensuing recovery. But there is a trade-off. Ignoring prices means the fund can be overweight in stocks with declining fundamentals, which can add to its risk.

While the fund includes growth stocks, they do not detract from its value orientation because it underweights them. This benefits investors because it allows the fund to benefit from mean reversion in valuations across the entire value-growth spectrum. The fund doesn’t constrain country or sector weights, so it can exhibit some country or sector biases relative to the market.

Value strategies like this one have not performed well relative to the market over the past decade. But sweeping growth stocks into the portfolio has been an advantage, helping the fund beat the MSCI ACWI Ex USA Value Index by slightly more than 2 percentage points annualized over the 10 years through May 2023. The fund’s 0.45% expense ratio is less than half the fee levied by a typical competitor in the foreign large-value Morningstar Category and should continue to provide a durable edge.

Analyst Rating

A value strategy that benefits from mean-reverting prices.

Senior Analyst

Daniel Sotiroff

Shell PLC

TotalEnergies SE

BHP Billiton

National Energy Services Reunited

Rogers

Royal Bank of Canada

Autoliv

SPDR Bloomberg Barclays Mortgage Backed Bond ETF

Rio Tinto plc Sponsored

Toronto-Dominion Bank

This fundamentally weighted portfolio earns an Above Average Process rating for capturing mean-reverting prices across the entire spectrum of large-cap stocks.

Above Average

Process

The index management team that leads this fund is backed by a robust supporting cast of analysts and traders and a flexible technology platform. Those resources should facilitate tight index tracking, affirming the experienced group’s Above Average People Pillar rating. 

Peter Hubbard, Michael Jeanette, Tony Seisser, and Pratik Doshi are named to this fund. Hubbard heads up the group. The most seasoned of the bunch, he has managed portfolios for Invesco since 2007. Jeanette started as a portfolio manager in 2008 and leads the equity group under Hubbard. Seisser and Doshi came aboard in 2013 and 2018, respectively, rounding out an experienced quartet. 

Most of the day-to-day operations are left to a web of supporting portfolio managers and analysts. Invesco’s global trading desk executes all trades. That frees up the named managers to confer with index providers to ensure investability, tackle corporate actions, and improve tax efficiency, among other long-term projects. An independent risk committee monitors the operation and meets with the managers on an ongoing basis.

Invesco’s proprietary portfolio management dashboard automates much of the team’s workflow. It consolidates a wealth of fund- and index-specific information to promote close tracking. The platform does not handle every task that the team must complete, but it is flexible enough to accommodate most other features that Invesco decides to build into it.

People

Invesco succeeds in a number of areas but also has its share of subpar offerings, along with many others that land somewhere in the middle. A mid-2023 change of CEO, from longtime chief Marty Flanagan to veteran Invesco executive Andrew Schlossberg, is noteworthy, and several other executives retired or departed in 2023. Portfolio-manager shuffles aimed at bolstering poor performers, which began under Flanagan, have continued under Schlossberg, who told Morningstar his most important aim is bolstering “investment quality.” However, major changes of direction or approach are unlikely. The firm retains a Morningstar Parent rating of Average. 
Invesco’s international-equity teams in Texas and New York remain solid. However, the extensive U.S.-equity lineup needs improvement. Fixed-income offerings run the gamut: The multisector and short-term-bond areas are good, but corporate high-yield is less impressive. The firm’s exchange-traded fund lineup includes the popular Nasdaq-focused QQQ; passive strategies make up around 37% of Invesco’s assets under management. Invesco has not been averse to trying new types of strategies, and it was among the firms that immediately launched a spot bitcoin ETF after SEC approval in early 2024.
The picture outside the United States is mixed. Fund performance has been subpar in Asia, and while the picture has brightened in the United Kingdom and Europe, that region still can’t be considered a strength.

Average

Parent

Invesco FTSE RAFI Developed Markets ex-U.S. ETF

PXF tracks an index of 1,000 of the biggest companies in developed markets outside the US that are selected and weighted based on fundamental measures.

Designed to provide broad exposure to the Broad Developed World ETFs category of the market, the Invesco FTSE RAFI Developed Markets ex-U.S. ETF (PXF) is a smart beta exchange traded fund launched on 06/25/2007.

Is Invesco FTSE RAFI Developed Markets ex-U.S. ETF (PXF) a Strong ETF Right Now?

WisdomTree U.S. High Dividend Fund

Pacer Metaurus US Large Cap Target Dividend 300 ETF

Serious investors see the beauty of investing in ETFs that yield 3-5%. The Globe and Mail published an opinion piece on September 26 discussing dividend stocks becoming more critical than ever due to higher interest rates and the end of cheap capital.

3 ETFs to Buy Yielding 3%-5%

Archer-Daniels-Midland Company

Coterra Energy

Ecopetrol

First Trust DJ Global Select Dividend Index Fund

Schwab Fundamental International Large Co. Index ETF

Fortescue Metals Group Limited

First Trust Indxx Global Natural Resources Income ETF

Xt EAFE Div Yld Shs

Nutrien

Petroleo Brasileiro

Suncor Energy

Vale S.A.

SPDR S&P Global Dividend ETF

Materials Select Sector SPDR Fund

Energy Select Sector SPDR Fund

First Trust Indxx Global Natural Resources Income ETF holds 50 global stocks, mostly in materials and energy. The portfolio is quite concentrated in a few countries, industries and holdings. This fund may profit by inflation.

FTRI: ETF With 8% Yield To Bet On Commodities

Is Invesco FTSE RAFI Developed Markets exU.S. ETF (PXF) a Strong ETF Right Now?

There are compelling discounts to be had with ex-U.S. equities, and the Invesco FTSE RAFI Developed Markets ex-U.S. Portfolio (NYSEArca: PXF) is a prime avenue for investors looking to access that increasingly important theme. PXF is based on the FTSE RAFI Developed ex U.S. 1000 Index.

Bargains on International Stock ETFs Point to ‘PXF'

News for Invesco FTSE RAFI Developed Markets ex-U.S. ETF ETF (PXF)