Invesco FTSE RAFI Europe UCITS ETF

Issuer: Invesco

Asset Class: Equity

TER: 39bps

Trading Currency: GBX

Pays Income: False

Listing Date: 21 Nov 2007

Ticker: PSRE

ISIN: IE00B23D8X81

This fund offers exposure to European equities using a non-market-cap-weighted methodology. It tracks an index based on the Research Affiliates Fundamental Index (RAFI) approach, which selects and weights companies based on four fundamental metrics: book value, cash flow, sales, and dividends. This method aims to sever the link between a stock's price and its weight in the portfolio, thereby avoiding the potential pitfalls of traditional market-cap indices, such as over-allocating to overvalued stocks and under-allocating to undervalued ones. The core principle is to anchor the portfolio to the economic footprint of a company rather than its market valuation, providing a unique alternative to conventional passive strategies.

This strategy may appeal to investors seeking a more value-oriented approach to European equities, as the fundamental weighting often leads to a tilt towards companies with lower valuation multiples. By systematically rebalancing back to these fundamental weights, the strategy inherently sells constituents that have become more expensive and buys those that have become cheaper, embodying a disciplined, contrarian investment process. The fund provides a diversified portfolio of large-cap European companies across various sectors and countries, offering a core holding for those looking to capture the potential of the European market through a 'smart beta' lens, which may offer a different risk-return profile compared to traditional investments.