From Seeking Alpha: 2024-06-23 20:41:31

Tensions between China and the U.S. have led to uncertainty for investors in emerging markets funds that include China. However, the iShares MSCI Emerging Markets ex China ETF (EMXC) offers a solution by excluding Chinese stocks. With exposure to 720 large and mid-cap stocks in emerging markets, EMXC has outperformed its peers with a 35.2% total return since inception.

China’s economic challenges, including a housing bubble burst and declining population, make EMXC’s exclusion of Chinese stocks favorable. As tensions between the U.S. and China escalate, global supply chain readjustments will benefit many emerging markets that EMXC has exposure to. With a high tech sector exposure, EMXC is well-positioned for growth and offers a strong alternative to funds like iShares MSCI Emerging Markets ETF (EEM) which includes Chinese stocks.

EMXC’s geographical allocation heavily favors Taiwan and South Korea, both leading countries in the tech industry. Taiwan Semiconductor Manufacturing Corporation and Samsung Electronics are among the top holdings, with significant exposure to the information technology sector. As global supply chains shift away from China, emerging markets like Taiwan, South Korea, and Southeast Asia stand to benefit from new manufacturing opportunities.

Investors should consider geopolitical risks when investing in EMXC, especially with Taiwan accounting for a significant portion of the fund’s portfolio. While the potential for a Chinese invasion of Taiwan remains uncertain, EMXC offers lower geopolitical risk compared to funds like EEM which have exposure to Chinese stocks. With a lower expense ratio of 0.25%, EMXC provides a cost-effective option for investors seeking emerging market exposure without Chinese stock risk.



Read more at Seeking Alpha: EMXC: A Beneficiary To Global Supply Chain Readjustment (NASDAQ:EMXC)