Invesco's RAFI ETF Has One of The Best Charts I've Seen This Year

"The Invesco RAFI Developed Markets ex-U.S. ETF (NYSEARCA:PXF) has delivered one of the most impressive runs in international equity markets over the past year. This wasn't a volatile momentum spike that reversed course. Instead, the rally unfolded with remarkable consistency, delivering a 22.4% return over the past year with a maximum drawdown of only 8.3%, reflecting sustained demand for international value exposure as investors rotated away from expensive U.S. growth stocks."

"PXF's fundamental weighting methodology created a natural advantage during the international rotation. The fund returned 22.4% over the past year, outperforming the iShares MSCI EAFE ETF (NYSEARCA:EFA) which returned 18.7% over the same period. The approach automatically tilted the portfolio toward value sectors like financials and energy, which became the market leaders as investors rotated away from expensive U.S. growth stocks. The SPDR S&P 500 ETF Trust (NYSEARCA:SPY) returned 19.2% over the same period, underscoring how dramatically the leadership shifted away from U.S. mega-cap technology."

"A major factor supporting international equity performance is dollar weakness. When the U.S. dollar declines against major currencies like the euro, yen, and pound, international stocks get a tailwind from currency translation. For U.S. investors, foreign earnings become more valuable when converted back to dollars. This dynamic has been particularly powerful as markets price in Federal Reserve rate cuts and a narrowing interest rate differential between the U.S. and other developed economies."

PXF returned 22.4% over the past year with a maximum drawdown of only 8.3%, showing steady international value performance. The fund's fundamental weighting methodology tilted exposures toward value sectors such as financials and energy, which led markets during a rotation away from expensive U.S. growth stocks. PXF outperformed iShares MSCI EAFE (18.7%) and SPY (19.2%) over the same period. U.S. dollar weakness provided an additional tailwind through favorable currency translation for U.S. investors. Market expectations for Federal Reserve rate cuts and a narrowing interest-rate differential supported the dollar decline. Continued dollar weakness and dovish Fed policy would extend the advantage for developed international markets.

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