Under the Hood of MEM | ETF Trends

One of the most significant benefits of getting emerging markets exposure through an active ETF like the Matthews Emerging Markets Equity Active ETF (MEM) is the manager’s ability to capture opportunities that the indexes miss.

The fund is able to access opportunities that may be outside of an index’s purview, such as compelling opportunities in frontier markets or developed markets that relate heavily to emerging markets; for example, exporting primarily to emerging markets countries.  

MEM invests in emerging market companies with perceived sustainable growth potential, capitalizing on consumption and innovation trends. The fund utilizes an all-cap, company-first approach, which emphasizes fundamental research over top-down country or sector allocation.  

Since inception (July 13 through November 22), MEM has returned 6.38% on a price change basis while the MSCI Emerging Markets Index has returned -4.44% on a price change basis during the same period, according to YCharts. 

Both MEM and the MSCI Emerging Markets Index have demonstrated impressive returns in the past month, with MEM still leading. MEM has returned 8.01% and the MSCI index has returned 7.21% on a price change basis over one month.  

MEM, as of September 30, offers exposure to China/Hong Kong, India, Mexico, Brazil, Vietnam, South Korea, Taiwan, Singapore, Canada, Indonesia, Australia, Philippines, United States, United Kingdom, France, Qatar, Poland, Argentina, Israel, Turkey, and Kazakhstan. 

The active ETF holds 55 securities as of November 23. The top 10 holdings in MEM include Taiwan Semiconductor Manufacturing Co, Samsung Electronics Co, Tencent Holdings, First Quantum Minerals LT, HDFC Bank, FPT Corp, Woodside Energy Group Ltd, Prologis Property Mexico, Icici Bank, and Infosys.  

As of September 30, the fund’s sector breakdown is as follows: financials (25.1%); information technologies (22.5%); materials (10.2%); consumer discretionary (9.8%); real estate (7.7%); energy (6.8%); industrials (6.0%); consumer staples (4.6%); communication services (3.5%); and health care (2.4%). 

MEM charges 79 basis points.  

For more news, information, and analysis, visit the Emerging Markets Channel.