Unleash Global Growth: Why Momentum Investing Abroad with IMTM Could Be Your Next Smart Move

In the dynamic world of investing, the quest for superior returns often leads us beyond domestic borders. While US equities frequently dominate portfolios, a compelling case can be made for international exposure, especially when combined with a powerful investment factor: momentum. The iShares Edge MSCI International Momentum ETF (IMTM) offers a sophisticated gateway to this strategy, blending global diversification with the proven efficacy of momentum investing.

Momentum, at its core, is the tendency for assets that have performed well recently to continue performing well in the near future.

This isn't just a fleeting market anomaly; it's a deeply researched phenomenon that has delivered consistent outperformance across various asset classes and geographies for decades. For investors seeking an edge, harnessing this factor can be a game-changer. What makes momentum particularly attractive in the international arena is its potential to capture diverse growth stories unfolding across different regions and economies, uncorrelated with purely domestic trends.

IMTM isn't just a broad international index fund; it's a carefully constructed ETF designed to capture this momentum premium.

It tracks the MSCI World ex USA Momentum Index, which identifies companies with strong price momentum over the past 6 to 12 months, excluding the most recent month to avoid short-term reversals. This isn't about chasing fads; it's about systematically identifying and investing in companies exhibiting sustained upward trends in over 20 developed countries outside the US.

This sophisticated methodology ensures that your portfolio is aligned with the prevailing strength in global markets.

Comparing IMTM to more traditional broad international ETFs like the iShares Core MSCI EAFE ETF (IEFA) or the iShares Core MSCI Total International Stock ETF (IXUS) reveals its unique appeal.

While IEFA and IXUS offer broad market exposure, IMTM focuses on a specific factor that has historically led to outperformance. This factor-based approach allows investors to potentially enhance returns without increasing their overall market risk exposure, providing a targeted way to tilt their international allocation towards proven winners.

The portfolio of IMTM is typically well-diversified across sectors and countries, reflecting where momentum is strongest globally.

While its specific holdings will change frequently due to its active momentum strategy, common sectors often include technology, industrials, and consumer discretionary, depending on market cycles. This dynamic rebalancing is key to its strategy, ensuring it continuously rotates into assets exhibiting strong recent performance, thus avoiding prolonged exposure to underperforming segments.

Of course, no investment strategy is without its nuances.

Momentum strategies, by their nature, involve higher portfolio turnover as the fund constantly adjusts its holdings to capture the latest trends. This can sometimes lead to slightly higher trading costs and, for taxable accounts, potentially less favorable tax efficiency compared to static index funds.

However, for investors who understand and accept these characteristics, the potential for enhanced returns often outweighs these considerations, especially when held in tax-advantaged accounts.

In conclusion, for investors looking to diversify their portfolios internationally and gain exposure to a historically robust factor, IMTM presents a compelling option.

It offers a systematic, research-backed approach to investing in global equities exhibiting strong price momentum. By strategically allocating a portion of your international equity exposure to IMTM, you're not just investing abroad; you're investing in the powerful engine of global market trends, positioning your portfolio for potentially significant growth.