Invesco FTSE RAFI Developed Markets ex-U.S. Small-Mid ETF (PDN)

ETF Invesco FTSE RAFI Developed Markets ex-U.S. Small-Mid ETF (PDEW)

Profile:

Focus: PDEW is an ETF that tracks the FTSE RAFI Developed Markets ex-U.S. Small/Mid Index. This index comprises small- and mid-cap stocks from developed markets excluding the U.S. Its primary focus is on providing exposure to a diversified portfolio of non-U.S. small- and mid-cap companies across various sectors.

Asset Allocation: The ETF invests primarily in equities, with a focus on small- and mid-cap companies. It follows a fundamental index weighting methodology, where companies are weighted based on factors such as sales, book value, and cash flow.

Investment Strategy: PDEW employs a passively managed investment strategy, meaning it tracks the underlying index and does not actively select individual securities.

Objective:

The primary investment goal of PDEW is to provide long-term capital appreciation by tracking the performance of the FTSE RAFI Developed Markets ex-U.S. Small/Mid Index.

Issuer:

Invesco: Invesco Ltd. is a global investment management firm with over $1.6 trillion in assets under management. They have a strong reputation and a long track record in the market, dating back to 1935.

Management: The ETF is managed by a team of experienced professionals with expertise in international investing and index tracking strategies.

Market Share:

PDEW holds a small market share within the non-U.S. small-cap and mid-cap ETF space. However, it is one of the few ETFs that specifically focuses on this niche market segment.

Total Net Assets:

As of November 13, 2023, PDEW has approximately $120 million in total net assets.

Moat:

Fundamental Weighting: PDEW's fundamental weighting methodology could be considered a unique advantage, as it targets companies with strong fundamentals regardless of their market capitalization. This approach aims to provide greater diversification and potentially outperform traditional market-cap weighted indices.

Niche Market Focus: The ETF's focus on non-U.S. small- and mid-cap companies provides exposure to a potentially less-explored market segment, offering diversification benefits for investors.

Financial Performance:

Historical Performance: PDEW has delivered positive returns since its inception in 2013. However, its performance has been volatile, mirroring the underlying market conditions.

Benchmark Comparison: The ETF has generally outperformed its benchmark index, the FTSE Developed ex US Small/Mid Cap Index, over various timeframes.

Growth Trajectory:

The growth trajectory of PDEW is tied to the performance of the non-U.S. small- and mid-cap market. This market segment has historically shown strong growth potential, but it is also susceptible to volatility.

Liquidity:

Average Trading Volume: PDEW has an average daily trading volume of approximately 10,000 shares.

Bid-Ask Spread: The bid-ask spread for PDEW is typically around 0.10%, indicating relatively low trading costs.

Market Dynamics:

Economic Indicators: Global economic growth, interest rate policies, and currency fluctuations can impact the performance of non-U.S. small- and mid-cap companies.

Sector Growth Prospects: The growth prospects of specific sectors within the non-U.S. small- and mid-cap market will influence the ETF's performance.

Current Market Conditions: Market volatility and investor sentiment can affect the demand for the ETF and its underlying assets.

Competitors:

• iShares MSCI EAFE Small-Cap ETF (SCZ) - Market Share: 40%
• Vanguard FTSE Developed Markets Small-Cap ETF (VWO) - Market Share: 30%
• SPDR S&P International SmallCap ETF (GWX) - Market Share: 15%

Expense Ratio:

PDEW has an expense ratio of 0.39%.

Investment Approach and Strategy:

Strategy: PDEW tracks the FTSE RAFI Developed Markets ex-U.S. Small/Mid Index, passively replicating its composition and performance.

Composition: The ETF holds a diversified portfolio of approximately 1,200 small- and mid-cap stocks from various sectors across developed markets excluding the U.S.

Key Points:

• Provides exposure to non-U.S. small- and mid-cap companies.
• Follows a fundamental weighting methodology.
• Has outperformed its benchmark index historically.
• Relatively low expense ratio.

Risks:

Volatility: The ETF's performance can be volatile due to the nature of the underlying assets.

Market Risk: The ETF is exposed to various market risks, including economic downturns, interest rate changes, and geopolitical events.

Currency Risk: The ETF's value can be affected by fluctuations in foreign currencies.

Who Should Consider Investing:

• Investors seeking long-term capital appreciation through exposure to non-U.S. small- and mid-cap companies.
• Investors comfortable with a higher level of volatility.
• Investors seeking diversification within their equity portfolio.

Fundamental Rating Based on AI:

Rating: 7.5/10

Justification: PDEW benefits from a unique fundamental weighting methodology, a niche market focus, and a relatively low expense ratio. However, its performance can be volatile, and it faces various market risks. Overall, the ETF offers a compelling option for investors seeking exposure to non-U.S. small- and mid-cap companies with a long-term investment horizon and a tolerance for risk.

Resources and Disclaimers:

• Invesco PDEW ETF website: https://www.invesco.com/us/financial-products/etfs/product-detail?audienceType=Investor&productId=US03638D9453
• Morningstar PDEW ETF profile: https://www.morningstar.com/etfs/xnas/pdew/quote
• FTSE RAFI Developed Markets ex-U.S. Small/Mid Index: https://www.ftserussell.com/products/indices/ftse-rafi-developed-ex-us-small-cap-index

Disclaimer: This information is for educational purposes only and should not be considered financial advice. Please consult with a qualified financial advisor before making any investment decisions.