Core Insights - The Invesco RAFI Developed Markets ex-U.S. ETF (PXF) has achieved a 22.4% return over the past year, with a maximum drawdown of only 8.3%, indicating strong demand for international value exposure as investors shift away from U.S. growth stocks [1][2] Performance Comparison - PXF outperformed the iShares MSCI EAFE ETF (EFA) which returned 18.7% and the SPDR S&P 500 ETF Trust (SPY) which returned 19.2% during the same period, highlighting a significant shift in market leadership away from U.S. mega-cap technology [2] Dollar Dynamics - A key factor in the strong performance of international equities is the weakness of the U.S. dollar, which enhances the value of foreign earnings when converted back to dollars for U.S. investors [3] - The dollar's decline is influenced by expectations of Federal Reserve rate cuts and a narrowing interest rate differential with other developed economies [3][4] Methodology and Value Rotation - PXF employs a fundamental weighting methodology that favors companies based on their business strength rather than market capitalization, effectively capturing the value rotation towards sectors like financials and energy [6][7] - The fund's top holdings consist of cash-generative businesses that align with the RAFI metrics of sales, cash flow, and dividends, positioning it well for the current market trend [7] Future Outlook - The combination of dollar weakness and value outperformance is expected to create a favorable environment for fundamentally-weighted international exposure, making it a critical dynamic to monitor in the coming year [8]