PDN vs VSS

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

VSSAVanguard FTSE All-World ex-US 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.

VSS One ticker for the small companies the rest of the world runs on: roughly 4,800 stocks across developed and emerging markets outside the US, at 0.06% a year. Vanguard has run it since 2009.

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.

VSS Seeks to track the FTSE Global Small Cap ex US Index, providing broad exposure to developed and emerging non-U.S. small-cap equity markets worldwide through passive index sampling.

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.

• VSS 0.06% a year, against a roughly 0.40% median for international small-cap funds. Only Schwab's SCHC matches the price.
• Developed and emerging markets in the same basket, roughly 4,800 names deep, so no single country or company carries much of the load.
• Tracks its FTSE Global Small Cap ex US benchmark closely and trades tightly for a fund built on thousands of overseas small caps.
• Running since 2009, now a multi-billion-dollar fund that pays out quarterly. Long track record, deep plumbing.vanguard.com

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.

• VSS Small caps abroad move harder than blue chips, and everything is priced back into dollars, so currency swings ride along.vanguard.com
• Vanguard samples the index rather than buying every line item, so the portfolio approximates the benchmark instead of replicating it.vanguard.com
• Coverage stops at the US border by design. American small caps sit entirely outside the mandate.

Full PDN profile⁠

Full VSS profile⁠