International equities trended well throughout the first half of 2025. The broader asset class sits second out of the six major asset classes in our DALI rankings, but it has seen more near-term momentum than any other asset class 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 26 changes in the most recent evaluation. This was a relatively small number of changes, speaking to the consistent leadership demonstrated by developed markets. There are 22 countries represented, half of which did not see any allocation change this quarter. Canada is the most overweight country at 14.8%, with 3% coming from new allocations. Switzerland and South Korea saw the largest allocation increases, adding 6.8% and 5.6% respectively.

On the sector side, Finance remains at the top holding at 25.4%, although it saw minimal allocation adjustment this quarter. Instead, Producer Manufacturing took the lead in new sector additions, with an 11.5% boost that raised its total share to 19.1%, now the second-largest sector in PIZ. Technology Services and Electronic Technology 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 50 names were swapped out for new positions. There are 12 countries represented in the holdings, nine of which saw changes. Taiwan remains the most heavily weighted country, making up more than 32% of the portfolio, and saw the largest number of new additions at 21.6%. China also saw notable rotation, adding 11% in new allocation to bring its total weight to 27.4%, making it the second-largest country in the portfolio.

From a sector standpoint, Finance continues to dominate, now representing 32.5% of the portfolio after receiving the highest level of new allocation at 13%. Electronic Technology held steady as the second-largest sector at 17.1%, followed by Health Technology at 10.5%, boosted by a 7.3% increase in new names. These three sectors are now the only ones with double-digit weights in PIE, underscoring the momentum overweight in defined areas of strength.

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.