Emerging Global Advisors expanded its line of emerging market exchange traded funds with a broad strategy that specifically excludes China for investors who want more control over their developing market exposure.
According to a press release, the EGShares EM Core ex-China ETF (NYSEArca: XCEM) started trading Wednesday, September 2. The new ETF has a 0.35% expense ratio.
XCEM will try to reflect the performance of the EGAI Emerging Markets ex-China Index, which tracks up to 700 emerging market companies, excluding those domiciled in China and Hong Kong.
“In today’s market environment, some investors have noted that China comprises a significant portion of broad-based emerging market benchmarks. That portion is growing as index funds in the category plan to increase their allocations to China through A-shares,” EGA President and Founder Robert C. Holderith said in the press release. “We launched XCEM to deliver core emerging market exposure independently of China, giving investors an option to refine their portfolios in light of other China holdings or market developments.”
For instance, the iShares MSCI Emerging Markets ETF (NYSEArca: EEM), which tracks the widely observered MSCI Emerging Markets Index, includes a 22.8% tilt toward China, followed by 14.9% South Korea, 12.4% Taiwan, 8.6% India and 8.0% South Africa.
In contrast, XCEM excludes China but slightly ups its exposure to the other emerging markets, including South Korea 18.3%, Taiwan 15.8%, Brazil 13.6%, India 9.8% and South Africa 9.6%, among others.
Top holdings include Samsung Electronics 4.4%, Taiwan Semiconductor Manufacturing 2.1%, Banco Bradesco 1.7% and Naspers Limited 1.6%.