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

The Invesco RAFI Developed Markets ex-U.S. Small-Mid ETF (PDN) is a fundamentally weighted fund targeting small- and mid-cap companies in developed markets outside the United States. It utilizes the Research Affiliates Fundamental Index (RAFI) methodology to weight securities based on book value, cash flow, sales, and dividends.

You can sell covered calls on Invesco RAFI Developed Markets ex-U.S. Small-Mid ETF to lower risk and earn monthly income. Born To Sell's covered call screener gives you customized search capabilities across all possible covered calls but here are a couple of examples for PDN (prices last updated Mon 4:16 PM ET):

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Core Business and Products

The Invesco RAFI Developed Markets ex-U.S. Small-Mid ETF (PDN) provides a "smart beta" approach to international investing. Unlike traditional international ETFs that weight companies by market capitalization (size), PDN follows the RAFI Fundamental Select Developed ex-US 1500 Index. This index selects and weights approximately 1,500 small- and mid-cap companies based on four fundamental measures: adjusted sales, retained operating cash flow, dividends plus buybacks, and book value. By breaking the link between price and weight, PDN seeks to avoid the potential overvaluation traps found in cap-weighted indices.

By 2026, the fund is diversified across mature economies, with its largest country allocations in Japan (30%), Canada (10%), and South Korea (9%). Sector-wise, the fund is anchored by Industrials (23%), Financials (14%), and Materials (12%). Key holdings include international mid-cap leaders such as Mirae Asset Securities, Tower Semiconductor (TSEM), and Cameco (CCJ). The "product" is a value-tilted, disciplined exposure to the operational "workhorses" of the global economy outside the U.S.

Competitive Landscape

PDN competes in the international small- and mid-cap segment, primarily against broad benchmarks and other factor-based strategies. In 2026, its primary rivals include:

1. iShares MSCI EAFE Small-Cap ETF: The broad-market benchmark for international small caps. It offers significantly higher liquidity than PDN, though it uses traditional market-cap weighting.

2. Vanguard FTSE All-World ex-US Small-Cap ETF: A massive, low-cost (0.07% fee) alternative that includes emerging markets, providing broader but less "purely developed" exposure.

3. Invesco RAFI Developed Markets ex-U.S. ETF: PDN’s large-cap counterpart. Investors often pair these two to create a complete fundamentally-weighted international portfolio.

4. WisdomTree International SmallCap Dividend Fund: A key rival that targets the smaller end of the international spectrum with a specific focus on dividend-paying companies.

5. iShares MSCI EAFE Value ETF: While focused on larger companies, it competes for the same "value" factor allocation that PDN targets in the mid-cap space.

Strategic Outlook and Innovation

The strategic appeal of PDN in 2026 is its role as a valuation stabilizer. As global mega-cap indices become increasingly concentrated, PDN’s fundamental weighting provides a "mean-reversion" mechanism. The 2026 innovation focus for the fund involves enhanced screening for shareholder yield (dividends plus buybacks), a metric increasingly prized by international investors. Its annual rebalancing ensures it trims expensive outperformers and reallocates to companies that remain fundamentally sound but undervalued by the market.

For the active investor, PDN is technically optionable, but liquidity is extremely low. While a listed options chain exists, there is often zero open interest and very wide bid-ask spreads. This makes it a difficult candidate for active covered call writing. Most traders looking for income-generating strategies in international small-to-mid caps prefer the much more liquid SCZ or EFV. PDN is best utilized as a long-term core holding for its structural value tilt rather than as an options-based income vehicle.

Want more examples? PDM Covered Calls | PDP Covered Calls