The fund tracks a momentum factor index that selects developed-market large- and mid-cap stocks, excluding the US and South Korea, with strong recent price trends. The index takes each stock's trailing one-year return, excludes the most recent month, adjusts the result for volatility, and includes only the top-scoring group.

It suits investors who want to diversify into developed-market stocks outside the US while tilting toward stocks with good momentum rather than holding the whole market.

It is a passive (index-tracking) ETF managed by Invesco.

The strategy relies on the tendency of stocks that have already risen to keep rising for a while. It excludes the most recent month from the trailing one-year performance to filter out short-term reversal noise, divides by volatility to lower the scores of stocks with large swings, and then includes only the top group. Holdings are reconstituted at set intervals.

• It targets only developed markets outside the US, which makes it a good complement to a portfolio heavily weighted toward the US
• Its volatility-adjusted scoring reduces concentration compared with simply holding the stocks with the highest raw returns
• The structure naturally gives a larger weight to large-cap European and Canadian stocks in sectors such as financials and industrials

Assets under management (AUM) stand at $4.2B, and the expense ratio is 0.25% per year.

Momentum factor performance is concentrated in periods when a trend persists, and reversals can be sharp when the market turns abruptly. The fee falls within the average range for factor products.

The fund has tended to track relatively well during phases when developed markets outside the US gain strength. Conversely, when market leadership changes sharply, holdings are replaced with a delay, which tends to weigh on performance.

Demand to reduce portfolios that have become too concentrated in the US is flowing into developed-market international products in general. The direction of the dollar and the movements of European and Japanese currencies also act as variables that determine actual returns for investors who convert to won.

Its strength is that it automatically picks stocks with strong momentum in developed markets outside the US, while its weaknesses are reversals at turning points and stock concentration.

IMTM(ETF), shown in the table, is a direct substitute that holds momentum stocks in developed markets outside the US, with larger assets and deeper liquidity. The PIZ ETF is also managed by Invesco but picks stocks using a relative strength approach and carries a higher fee burden. UIVM(ETF) is a multifactor product that combines value and momentum, so its stock selection criteria differ. To broaden exposure to emerging markets, consider the PIE ETF as well. If you want simple diversification without a factor tilt, broad developed-market products such as VEA and IEFA are options. To extend into small caps, consider SCZ, and for global exposure that includes the US, ACWX is also a choice.

Here are the items to review before buying this ETF. Factor products inevitably go through periods when their performance diverges from the market index, so it is better to decide your holding period and position size first.

A momentum strategy is strong when trends persist and weak when they break. Because holdings are replaced only at set intervals, losses can last longer during sharp reversals. When currency moves are added, the perceived volatility becomes even larger.

It is worth considering if you want to add developed-market exposure outside the US while tilting toward stocks with strong momentum. If you value size and liquidity, compare it with the IMTM ETF, and if you want broad holdings without a factor tilt, weigh it against broad products such as VEA.