Invesco's PXH ETF Jumped 38% as Emerging Markets Finally Heat Up

"The Invesco RAFI Emerging Markets ETF (NYSEARCA:PXH) has surged 38% over the past year as investors rediscover emerging market opportunities. This rally reflects a fundamental shift in how the fund approaches EM investing-using metrics like sales and cash flow rather than market cap to weight holdings. That methodology has delivered results, with shares climbing from around $20 to $27.70 by late January 2026."

"U.S. monetary policy drives PXH's performance through a clear mechanism: when the Fed cuts rates and the dollar weakens, emerging market borrowers face lower debt service costs while their equity valuations become more attractive to global investors. The Fed's late-2025 pivot toward rate cuts triggered exactly this dynamic, catalyzing the capital flows that have powered PXH's recent rally. Investors should monitor Federal Reserve policy statements and monthly consumer price index releases."

"With $1.7 billion in assets, the fund concentrates on Asia's largest companies measured by fundamental strength rather than market hype. This approach leads to holdings like Tencent and HDFC Bank (NYSE:HDB)-established businesses generating consistent cash flows that justify their economic weight in the portfolio. The 0.49% expense ratio reflects Invesco's ability to deliver this selective strategy without excessive costs. Emerging markets spent years in the wilderness as investors favored U.S. equities."

The Invesco RAFI Emerging Markets ETF (PXH) uses a fundamentals-weighted approach that emphasizes sales and cash flow instead of market capitalization. PXH returned about 38% over the past year, with shares rising from roughly $20 to $27.70 by late January 2026. The $1.7 billion fund concentrates on Asia's largest companies by fundamental strength, including holdings such as Tencent and HDFC Bank, which generate consistent cash flows. The fund charges a 0.49% expense ratio. PXH's rally was aided by a Fed pivot to rate cuts and a weakening dollar, while IMF forecasts and regional growth prospects support renewed investor interest. Investors should monitor Fed policy, CPI releases, and the dollar index for potential reversals.

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