Is Invesco RAFI Emerging Markets ETF (PXH) a Strong ETF Right Now?
Designed to provide broad exposure to the Broad Emerging Market ETFs category of the market, the Invesco RAFI Emerging Markets ETF (PXH) is a smart beta exchange traded fund launched on 09/27/2007.
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
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.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Because the fund has amassed over $1.49 billion, this makes it one of the larger ETFs in the Broad Emerging Market ETFs. PXH is managed by Invesco. PXH, 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.
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for PXH are 0.47%, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 4.14%.
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.
Taking into account individual holdings, Taiwan Semiconductor Manufacturing Co Ltd accounts for about 5.56% of the fund's total assets, followed by Alibaba Group Holding Ltd and Tencent Holdings Ltd.
The top 10 holdings account for about 31.1% of total assets under management.
The ETF has gained about 13.96% so far this year and it's up approximately 18.37% in the last one year (as of 06/11/2025). In the past 52-week period, it has traded between $18.80 and $23.22.
The ETF has a beta of 0.57 and standard deviation of 18.20% for the trailing three-year period, making it a medium risk choice in the space. With about 436 holdings, it effectively diversifies company-specific risk.
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 FTSE Emerging Markets ETF (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 FTSE Emerging Markets ETF has $88.74 billion in assets, iShares Core MSCI Emerging Markets ETF has $91.57 billion. VWO has an expense ratio of 0.07% and IEMG charges 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.
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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Invesco RAFI Emerging Markets ETF (PXH): ETF Research Reports
iShares Core MSCI Emerging Markets ETF (IEMG): ETF Research Reports
Vanguard FTSE Emerging Markets ETF (VWO): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).
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