This is a developed-market ex-US ETF that tracks a fundamental index methodology. Instead of market capitalization, it sets stock weights using four fundamental measures: sales, cash flow, book value, and dividends. It invests in large-cap stocks across Europe, Japan, and the Asia Pacific region.

It suits long-term investors who want value-oriented diversification across developed markets outside the US.

Invesco launched the ETF in 2007, and it is passively managed (index-tracking).

It uses a fundamental index methodology that combines four measures of corporate financial strength (sales, cash flow, book value, and dividends) to determine weights. As a result, compared with market-cap-weighted indexes, it carries a higher weighting in the financials, energy, and materials sectors and a lower weighting in growth stocks, which creates a value tilt.

• Stocks are weighted by fundamentals rather than market cap: a value-tilted portfolio
• Broad diversification across roughly 1,000 developed-market stocks outside the US

Assets under management (AUM) stand at $3.0B, and the expense ratio is 0.43% per year.

Its fee level is somewhat higher than peer ETFs such as FNDF and GSIE, but it is among the larger developed-market diversification ETFs that apply a fundamental index methodology.

Developed markets outside the US tend to show widely varying performance relative to the US, depending on dollar strength and weakness cycles and the global economic backdrop. By the nature of its fundamental index methodology, the fund tends to look relatively strong during value rebounds, while its relative returns versus market-cap-weighted approaches can fall during periods when growth stocks dominate.

Money flows in from investors who want to add international diversification to a US-concentrated portfolio, along with those interested in the value premium. Inflows into developed-market international ETFs as a whole tend to rise during periods of dollar weakness or when expectations for a global economic recovery increase.

Its strength is fundamentals-based, value-tilted diversification, while currency exposure and a relatively high fee are points to note.

FNDF, shown in the table, is a developed-market ETF run by Schwab that is based on a fundamental index and offers the same methodology at a lower fee. GSIE is Goldman Sachs' actively managed developed-market ex-US ETF, which blends factor strategies. GUNR and GNR are ETFs focused on natural resources and commodities, and they share a high weighting in developed-market energy and materials. IGF is an ETF focused on developed-market infrastructure companies. If you want a pure market-cap approach for the same developed-market international diversification, EFA and VEA are also worth comparing.

Here are the points to review before investing in PXF. It is important to check in advance the value-tilted structure created by the fundamental index methodology, the multi-currency exchange rate exposure, and the fee level.

The main risks are exchange rate fluctuations from multi-currency investing and a slowdown in developed-market economies. Given its value-tilted structure, its relative returns may fall short of market-cap-weighted peer ETFs in a rally led by growth stocks.

It is a suitable choice for investors who want to diversify across developed markets outside the US on a fundamentals basis. If fees are the priority, compare it with FNDF, and if you prefer a market-cap approach, compare it with EFA or VEA before choosing.