PDN vs SCZ

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

SCZAiShares MSCI EAFE Small-Cap ETF

In short

PDN PDN ignores the market-cap playbook. It tracks a RAFI fundamental index of roughly 1,600 small and mid caps across developed markets outside the US, a job it has been doing since 2007.

SCZ The purist's take on foreign small caps: developed markets only, outside the US and Canada. Trading since 2007, SCZ follows the MSCI EAFE Small Cap Index, so Japan, Europe and Australia are in and emerging markets stay out.

Stated mandate

PDN The fund tracks the RAFI Fundamental Select Developed ex US 1500 Index, targeting small- and mid-capitalization equities of developed international markets excluding the United States.

SCZ The fund seeks to track an index of small-cap equities from developed markets outside the United States and Canada, providing international diversification and exposure to overseas small-cap stocks.

Why people hold it

• PDN The benchmark is a fundamental index, not a market-cap one, so a stock's weight doesn't climb simply because its share price did.invesco.com
• Roughly 1,600 names covering both small and mid caps abroad, so it reaches past the tiny end of the bench. Distributions come quarterly.
• Live since 2007, and the portfolio still lines up tightly with the mandate on the tin: developed markets ex-US, small and mid cap.

• SCZ A clean, literal mandate: small companies in developed markets outside the US and Canada, with nothing else slipping into the basket.ishares.com
• It follows its stated index closely, one of the tighter implementations in the international small-cap group.
• Live since December 2007 and now a multi-billion-dollar fund that trades actively, the kind of scale that supports steady day-to-day liquidity.
• The 0.40% fee lands right at the median for its category, so the EAFE-specific screen doesn't carry a premium price.

Worth knowing

• PDN At 0.47% it sits above the plain-vanilla crowd: VSS and SCHC charge 0.06%, and fellow fundamental fund FNDC charges 0.39%.
• Trading is light for the category, so spreads and premiums can be a bigger slice of your real cost than the fee itself.
• Fundamental weighting means the portfolio can sit a long way from cap-weighted small-cap benchmarks, in either direction.

• SCZ Median is not cheap here. VSS and SCHC charge 0.06% for their own ex-US small-cap baskets, several times less than SCZ's 0.40%.
• Developed markets only. Emerging-market small caps sit outside the mandate, unlike all-world peers such as VSS.
• The index is unhedged, so currency moves land on top of small-cap price swings, a bumpier ride than developed large-cap benchmarks.

Full PDN profile⁠

Full SCZ profile⁠