Invesco RAFI Developed Markets ex-U.S. Small-Mid ETF

Invesco RAFI Developed Markets ex-U.S. Small-Mid ETF (PDN) is an index fund that holds about 1,500 small and mid-sized companies in developed countries outside the U.S. Japan made up 29.1% of its assets as of July 31, 2026. Most indexes size companies by stock-market value. PDN's RAFI index sizes them by sales, cash flow, book value and dividends instead. That approach costs 0.47% a year, the highest of five similar funds compared here.

• Over the year to Oct 27, 2026, PDN returned +12.8%, 4th of 5 among similar funds.
• Its 5-year annualized return was +6.8%.
• Its worst full calendar year was 2022 (-17.3%); its best was 2025 (+38.3%).
• The deepest fall in its price history was 33.7% (Sep 3, 2021 to Oct 12, 2022), recovered by May 5, 2025.

As of Jul 31, 2026, the fund held 1,571 securities; the ten largest made up 2.33% of assets. It also reported 14.29% in a money-market fund, most likely cash collateral from lending out shares rather than uninvested money.

• Over the three months to Jul 31, 2026, investors withdrew a net $30.5M (creations minus redemptions, per the N-PORT report).
• Monthly total returns reported for that quarter: +1.86%, -3.56%, +1.00%.

PDN tracks the RAFI Fundamental Select Developed ex US 1500 Index, which RAFI Indices, LLC builds and maintains. The index picks about 1,500 small and mid-sized companies from developed markets outside the U.S. As of December 31, 2025, it held 1,464 stocks, with market values from $19.6 million to $60.1 billion. The index provider counts South Korea, Poland and Israel as developed markets, along with Japan, Canada and Western Europe.

What sets the index apart is how it sizes each position. Most indexes weight companies by market value, so a stock's share grows as its price rises. This index uses four measures of business size instead: book value plus intangible assets, adjusted cash flow, adjusted sales, and dividends plus share buybacks. A company whose share price runs ahead of its business gains no extra weight. That tends to tilt the fund toward cheaper stocks.

The fund uses full replication, meaning it aims to own every stock in the index at the index's weight. It keeps at least 90% of assets in those stocks or in depositary receipts (certificates that represent foreign shares). It mostly trades when the index changes, and portfolio turnover was 33%, per the prospectus. As of July 31, 2026, the fund held 1,571 stocks, and the top 10 made up just 2.33% of assets. It uses no leverage or options. The fund doesn't hedge currencies, so a stronger dollar lowers its returns.

• PDN charges 0.47% a year, versus an average of 0.32% for the similar funds below (5th of 5, cheapest first).
• Using the prospectus's standard example, $10,000 invested would cost about $48 in the first year and $591 over 10 years (assuming a 5% annual return).

PDN spreads money across about 1,500 smaller companies outside the U.S., weighted by business size, which many U.S.-focused portfolios hold little of.

PDN adds smaller foreign companies to a portfolio, but the ride has been rough. Its price history starts in June 2020, so it doesn't show how the fund did in the 2008 crisis. The prospectus does show a 27.18% loss in the quarter ended March 31, 2020. In the 2022 bear market, the fund fell about 30% and took about 22 months to recover, until August 2024. Its deepest drop was 33.7%, from September 2021 to October 2022, and it took about 31 months to make up. Its worst calendar years were 2018 (-17.71%) and 2022 (-17.01%). Anyone who had to sell shares in those stretches would have locked in losses.

The trailing 12-month yield was 3.34% as of October 27, 2026, paid quarterly. The 0.47% expense ratio is above the 0.32% average of similar funds. Past results don't predict future returns, and a plan should look at the whole portfolio, not one fund.

Matched by holdings overlap from the latest N-PORT reports.