Why International Growth is Important
Many investors want international exposure, but broad funds often mix strong and weak stocks. IDMO does things differently by allocating more money to the stocks with the strongest momentum in developed markets outside the U.S.
The growth gap: Most international funds like VEA or IEFA returned about 55% over the past five years, while IDMO delivered 104.5% in the same period.1 This difference can really add up over time.
What you might not notice: Traditional international funds pick stocks by company size, so a struggling bank gets the same weight as a successful business. IDMO instead focuses on stocks with strong recent momentum, and this method so far has worked well.
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What is IDMO?
The Invesco S&P International Developed Momentum ETF (IDMO) officially launched on Feb 24, 2012 and right now manages about $3 billion in total assets.
The fund trades at around $58 per share and has about 14 years of performance data.
This exchange-traded fund is in the foreign large blend category and follows an index built to capture momentum in developed markets.
How the Strategy Works
IDMO tracks the S&P World ex U.S. Momentum Index, which uses a set of rules to select stocks.2 Here’s what that involves:
- Screens large and mid cap stocks from developed markets (Japan, UK, Canada, Europe, Australia).
- Ranks companies based on the past 12-month performance, excluding the most recent month.
- Stocks selected by price momentum and weighted by momentum scaled by market cap.
- The underlying index rebalances each quarter to capture changing market trends.
The momentum index focuses on developed markets excluding the US and focuses on companies with steady, strong price gains.
The Growth Trade-Off
IDMO’s 0.25% expense ratio costs more than the 0.03-0.07% charged by most broad international funds.
For example, on a $10,000 investment, you’d pay $25 per year instead of $3-7. However, the fund’s higher returns have more than made up for this extra cost in the past.
Proven Momentum Performance
Recent Investment Returns
| Timeframe (as of 12/31/25) | Average Annual Returns (IDMO) |
| Past Year | 42.14% |
| Past 3 Year Avg. | 24.46% |
| Past 5 Year Avg. | 14.14% |
| Past 10 Year Avg. | 12.01% |
Source: Performance data quoted as of December 31, 2025. Current performance may differ from these data ranges.
Comparing IDMO to the Foreign Large Blend Category
IDMO’s five-year total return of 104.5% is much higher than the foreign large blend category average of 55.4%, showing that the momentum strategy has worked well in developed markets outside the US.3
The fund’s past performance reflects its focus on international stocks that have strong price momentum. Your principal value and investment returns will vary based on market volatility, and the original cost may differ from current performance.
What Drives Investment Returns
IDMO’s sector shifts change with market conditions based on the underlying index methodology. The fund holds currently 182 international stocks selected by price momentum signals.
The S&P World Ex U.S. Momentum Index rebalances every quarter, opening the opportunity for the ETF to add sectors showing momentum and reduce those that are lagging.
The trailing dividend yield over the past twelve months was 3.59%.
Understanding Market Volatility
You may want to keep in mind that higher investment returns usually come with higher market volatility. IDMO can lag for years when momentum reverses. If we look at its 105% annual turnover, we can see how actively the fund rebalances to follow momentum signals.
Growth investors who use momentum strategies accept this volatility for the chance of better long-term returns.
Holdings & Growth Exposure
Key Holdings From the S&P World ex U.S. Momentum Index
The fund currently holds 182 international stocks but concentrates in proven winners, these are the current top 10:
- HSBC Holdings PLC (3.5%) – Global banking leader
- Rolls Royce Holdings PLC (3.4%) – Aerospace recovery play
- Banco Santander SA (3.0%) – European banking franchise
- Allianz SE (2.8%) – Insurance and asset management
- Siemens Energy AG (2.6%) – Renewable infrastructure
- Shopify Inc (2.6%) – E-commerce platform
- British American Tobacco (2.3%) – Consumer defensive
- Rheinmetall AG (2.3%) – European defense contractor
- UniCredit SpA (2.3%) – Italian banking
- Commonwealth Bank of Australia (2.2%) – Australian financial services
These companies make up 27% of the fund’s total assets. This concentration can boost investment returns if the stocks keep doing well. The index provider complies with required rules for position limits.
| ETF Name | Invesco S&P International Developed Momentum ETF (IDMO) |
| Underlying Index | S&P World Ex-U.S. Momentum Index |
| Inception Date | 2/24/2012 |
| Net Assets | $3B |
| Expense Ratio | 0.25% |
| Holdings | 182 |
| Top Ten Holdings % | 27.13% |
| Technology Exposure (%) | 3.68% |
| Largest Country (By Weight) | Canada (18.91%) |
| Dividend Yield (TTM) | 3.59% |
| Qualified Dividends (%) | 28.8% (2025) |
| Dividend Frequency | Quarterly |
Source: Performance data updated on January 26, 2026. Current metrics may differ from these data ranges.
Geographic Exposure
Major allocations are spread across developed markets excluding the US: Europe at 59.6% combined (39.5% Eurozone, 16.7% UK, 3.4% Europe Ex-Euro), Canada at 19.0%, Japan at 5.5%, and Australasia at 4.6%.
This mix gives you access to international stocks in several developed markets, while at the same time avoiding the risks inherent in emerging markets.
How Sector Rotation Works
Unlike regular index funds, IDMO’s sector weights change every quarter based on momentum signals. The index finds which stocks in developed markets have the strongest price momentum, then gives them more weight based on their size.
When momentum in a sector fades, the index provider complies with mandated procedures to reduce exposure during the next rebalancing.
» Want to compare with other top international ETFs? View our free index fund cheatsheet
Using IDMO for Growth
The Satellite Approach
IDMO may be used as a growth addition to your main international holdings, not as your only fund. Investors may use it to complement broader international funds or even just U.S. based equities. A simple start portfolio suggested by Warren Buffett contains 90% into the S&P 500 through his 2-fund portfolio approach.
By adding IDMO to your broader investments, you get a momentum boost while still staying diversified in developed markets.
Tax-Efficient Account Placement
Momentum strategies like IDMO have high turnover (105% per year), which can lead to more taxes. While IDMO is an ETF and is likely to reduce the tax impact, the chance of unintentional distributions triggered may still occur, so holding IDMO in tax-advantaged accounts like the Roth IRA or 401(k) could help your prevent significant tax drag over time.4
Not to mention, but the dividends from most international stocks are not very tax-efficient and the use of international equities in tax-advantaged accounts is highly recommend in order to compound growth without yearly tax bills.
Because of this potential impact, at InvestLane, we typically recommend a very low allocation to international funds within normal taxable brokerage accounts.
» Read more: 5 Tax-Inefficient Investments to Avoid in Taxable Accounts
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When to Rebalance
A recommended strategy is to set your target allocation and rebalance once a year, or if IDMO moves significantly away from your target allocation. Basic investing principles are to limit buying after strong years or selling after weak ones. Always aim to buy low, sell high.
Investors who stick to regular rebalancing can get the most out of the momentum strategy by buying when it’s down and trimming when it’s up.
Key Considerations
Who Should Invest
IDMO is a good fit for investors with a 10-year or longer time frame who can handle ups and downs in the market. If you prefer steady, predictable returns or don’t like seeing your investment change with momentum shifts, you may want to stick with broader index funds instead.
When you invest in a momentum index ETF, you’re choosing a strategy that will have both strong and weak periods compared to regular market-cap funds.
The Cost Question
IDMO costs five times more than basic international funds (0.25% expense ratio vs 0.05%), but its five-year outperformance has made the higher fee worth it for long-term investors. These costs are already included in the reported returns.
Trading and Liquidity
The IDMO ETF fund trades about 382,000 shares a day, so it’s easy to buy and sell. To avoid the most volatile moments, reduce trading in the first or last 15 minutes of the market day, when prices typically swing most.
See if your brokerage offers commission-free ETF trades. Most investors should buy IDMO and hold it for years, instead of trying to actively trade based on momentum signals.
Currency Impact
Your returns depend on both stock performance and currency exchange rates. Fluctuations in the euro, yen, pound, Canadian dollar, and Australian dollar compared to the US dollar can make international stocks more volatile.
The P World Ex U.S. Momentum Index does not hedge against currency changes, so exchange rates can either help or hurt your returns.
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Momentum Strategy Risks
It’s worth repeating that sudden market reversals can hurt momentum strategies more than others, since the index invests more in recent winners that may drop the most during corrections. Also, the fund’s 105% turnover means higher trading costs and could even lead to potential taxes if you hold it outside retirement accounts.
The momentum index is maintained by S&P Dow Jones Indices, which complies with regulatory requirements while implementing the rules-based methodology.5 Investors should review index methodology documentation to understand how securities get selected and weighted.
Next Steps
IDMO gives you a way to add international growth to your portfolio beyond regular market-cap funds. Its momentum strategy returned 104.5% over five years, compared to 55.4% for the average fund in its category.
Review Invesco’s latest fact sheet for current holdings and sector allocations. Compare IDMO’s historical performance against your existing international funds. If the growth potential and volatility profile fit your goals, consider adding a small position.
Consider a small portion to IDMO for international exposure, and adjust as you see results and get comfortable with the fund. The most important thing is to stay disciplined through both good and bad periods.
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