Our International Technical Leaders Indices were evaluated at the end of September, leading to some shifts in allocation to open the last quarter of the year.
International equities trended well throughout the first three quarters of 2025. The broader asset class sits second out of the six major asset classes in our DALI rankings, but it has seen continued near-term momentum since the end of April. Underneath the hood, sharp improvements from some focused areas have contributed to that recent strength.
Capitalizing on strength in international equities can be difficult. Different countries have different economic drivers to consider. There are also a multitude of different factors that can affect the price action of individual securities within each country. This often leads to increased dispersion between leaders and laggards in foreign markets, producing big winners but also big losers. Using a momentum-focused approach can be beneficial here, allowing a defined process to determine the strongest securities while avoiding the weakest ones.
Our international Technical Leaders indices seek to do just that, taking broader inventories from developed markets and emerging markets then only focusing exposure on the 100 names from each list that have demonstrated the strongest momentum. This includes the indices behind the Invesco Dorsey Wright Emerging Markets Momentum ETF (PIE) and the Invesco Dorsey Wright Developed Markets Momentum ETF (PIZ). Both indices were reconstructed at the end of the most recent quarter, leading to some allocation shifts to better align each strategy with areas of improvement.
Developed Markets
The Invesco DWA Developed Markets Momentum ETF (PIZ) saw 28 changes in the most recent evaluation. This was slightly more than the previous number of changes but still a relatively small number, speaking to the consistent leadership demonstrated by developed markets. There are 24 countries represented, including 16 that saw an allocation shift. Switzerland is the most overweight country at 14.5%, with only 0.5% coming from new allocations. The Netherlands and Canada saw the largest new allocation.
On the sector side, Finance remains at the top holding at 29.2% and saw the largest allocation adjustment this quarter at over 4%. Electronic Technology and Distribution Services also picked up steam, contributing to a broader mix of cyclical and growth-focused sectors.
Emerging Markets
The Invesco Dorsey Wright Emerging Markets Momentum ETF (PIE) saw more allocation shifts than PIZ at the end of last month, as 42 names were swapped out for new positions. There are 13 countries represented in the holdings, eight of which saw changes. Turnover was smaller this quarter than we saw in the previous quarter, highlighting the improvement in emerging markets. China saw the greatest number of new names added, picking up 21.5% in new allocation to bring its total weight to 33.7%, making it the largest country weight in the portfolio. Taiwan saw the second the greatest number of names added, representing 16.6% in new allocation to bring its total allocation to 32.8%. These two countries alone now make up two-thirds of the fund’s total allocation.
From a sector standpoint, Electronic Technology saw the largest increase in allocation, picking up 11.3% to now be tied with Finance at nearly 25% of the portfolio. Health Technology continued to see a notable pick-up in allocation, moving to 11.2%. Non-energy minerals also saw a spike in new names, bumping the industry weight to 10.8%.
Altogether, these changes reflect a continuation of the relative strength trend that has produced improvement for international equities in recent quarters. Both PIE and PIZ are seeing wider sector and regional participation, which is a positive sign for the momentum-based strategies these indices represent. Markets will likely change somewhat over the next three months, and the process behind these strategies will push them toward the strongest areas at the next quarterly evaluation. However, the consistent leadership displayed from the broader international space, especially in developed markets, leaves them well positioned heading into the back half of the year.
Disclosures:
This article is intended for Financial Professional Use Only.
Management and other expenses can have a material impact on performance when compounded over time. Past performance, hypothetical or actual, does not guarantee future results. In all securities trading there is a potential for loss as well as profit. It should not be assumed that recommendations made in the future will be profitable or will equal the performance as shown.
Click here for more information from Invesco on the
Invesco Nasdaq Dorsey Wright Developed Markets Momentum ETF (PIZ): https://www.invesco.com/us/financial-products/etfs/product-detail?audienceType=Investor&ticker=PIZ
Invesco Nasdaq Dorsey Wright Emerging Markets Momentum ETF (PIE): https://www.invesco.com/us/financial-products/etfs/product-detail?audienceType=Investor&ticker=PIE
Dorsey, Wright & Associates, LLC is owned by Nasdaq, Inc. and we have affiliates who also provide financial services, research, information, and act as Brokers/Dealers to a wide variety of clients. Our affiliates use the information we create to create indexes, which are then used to create Exchange Traded Funds. These things create a potential conflict of interest in that we may have an incentive to promote or use the products and services of our affiliates and business partners. A number of Dorsey Wright representatives are registered with and hold securities licenses with the affiliate broker-dealers. In this capacity, they assist with the marketing and distribution of Exchange Traded Products.
