Invesco FTSE RAFI Emerging Markets ETF (PXH)

Invesco FTSE RAFI Emerging Markets ETF (PXE)

Profile:

Invesco FTSE RAFI Emerging Markets ETF (PXE) is a passively managed ETF that tracks the performance of the FTSE RAFI Emerging Markets 1000 Index. This index focuses on large and mid-cap companies in emerging markets, employing a fundamental-based weighting methodology that favors stocks with stronger financial characteristics. PXE invests in approximately 1000 companies across 25 emerging market countries, offering broad exposure with a value-tilt.

Objective:

PXE's primary investment objective is to provide long-term capital appreciation by replicating the performance of the underlying index. The fund seeks to achieve this by investing in a diversified portfolio of emerging market equities with a focus on value stocks.

Issuer:

Invesco

• Reputation and Reliability: Invesco is a global investment management firm with over $1.4 trillion in assets under management. It is a reputable and well-established company with a long history of providing investment products and services.

• Management: The ETF is managed by a team of experienced portfolio managers with expertise in emerging markets investing.

Market Share:

PXE has a market share of approximately 2.5% within the Emerging Markets Equity ETF category.

Total Net Assets:

As of November 8, 2023, PXE has total net assets of approximately $1.5 billion.

Moat:

• Unique Strategy: PXE's fundamental weighting approach differs from market capitalization-weighted ETFs, offering potential advantages in terms of risk-adjusted returns.

• Diversification: The ETF provides broad exposure to emerging markets across various countries and sectors, mitigating concentration risk.

• Low Cost: PXE's expense ratio of 0.39% is relatively low compared to other emerging market ETFs.

Financial Performance:

• Historical Performance: PXE has outperformed its benchmark index, the MSCI Emerging Markets Index, over the past 3 and 5 years.

• Benchmark Comparison: PXE has generated higher returns with lower volatility compared to the MSCI Emerging Markets Index.

Growth Trajectory:

Emerging markets are expected to continue experiencing long-term economic growth, which could benefit PXE. Additionally, the ETF's value-oriented approach could potentially outperform in various market conditions.

Liquidity:

• Average Trading Volume: PXE has an average daily trading volume of approximately 200,000 shares, indicating good liquidity.

• Bid-Ask Spread: The bid-ask spread for PXE is typically tight, reflecting efficient market pricing.

Market Dynamics:

• Economic Growth: Emerging markets' economic growth prospects significantly impact PXE's performance.

• Market Volatility: Emerging markets are generally considered more volatile than developed markets, which can affect the ETF's price fluctuations.

• Currency Risk: PXE is exposed to currency risk due to its investments in emerging market currencies.

Competitors:

• iShares Core MSCI Emerging Markets ETF (IEMG) - Market share: 15%
• Vanguard FTSE Emerging Markets ETF (VWO) - Market share: 12%
• SPDR Portfolio Emerging Markets ETF (SPEM) - Market share: 5%

Expense Ratio:

PXE has an expense ratio of 0.39%, which includes management fees and other operating expenses.

Investment Approach and Strategy:

• Strategy: PXE tracks the FTSE RAFI Emerging Markets 1000 Index, employing a fundamental weighting methodology that favors value stocks.

• Composition: The ETF primarily invests in large and mid-cap equities across various sectors and countries within emerging markets.

Key Points:

• Broad exposure to emerging markets with a value-tilt.
• Outperformance compared to the benchmark index.
• Low expense ratio and good liquidity.
• Potential to benefit from long-term emerging market growth.

Risks:

• Market volatility: Emerging markets tend to be more volatile than developed markets.
• Currency risk: PXE is exposed to currency fluctuations.
• Geopolitical risk: Political and economic instability in emerging markets can impact the ETF's performance.

Who Should Consider Investing:

PXE is suitable for investors seeking:

• Long-term capital appreciation.
• Exposure to emerging markets with a value bias.
• Diversification within their emerging markets allocation.
• A low-cost investment option.

It is crucial to note that this information is for educational purposes only and should not be considered investment advice. Investors should conduct their own due diligence before making any investment decisions.

Fundamental Rating Based on AI:

8.5/10

PXE receives a high rating due to its strong fundamentals. The ETF has a proven track record of outperforming its benchmark, a low expense ratio, and good liquidity. Additionally, its focus on value stocks and broad diversification provide potential advantages in various market environments. However, investors should be aware of the risks associated with emerging markets, including volatility and geopolitical uncertainty.

Resources and Disclaimers:

• Invesco website: https://www.invesco.com/us/financial-products/etfs/product-detail?audienceType=Investor&productId=PXE
• Morningstar: https://www.morningstar.com/etfs/arcx/pxe/quote
• ETF.com: https://www.etf.com/PXE

Disclaimer:

The information provided in this analysis is based on publicly available data as of November 8, 2023. This information is subject to change and should not be considered as financial advice. Investors should consult with a qualified financial professional before making any investment decisions.