On the lookout for foreign equities? Seeking ways to diversify away from an expensive U.S. market? It may be worth looking to an emerging markets ETF like the KraneShares MSCI Emerging Markets ex China Index ETF (KEMX ) The strategy could take advantage of an appealing emerging markets landscape while leaving China exposure to other parts of a portfolio.
Why invest in emerging markets? Emerging markets have largely already digested global inflation waves. They stand out as much cheaper than U.S. equities, which are still hot from the overall tech craze. At the same time, moving global supply chains could benefit some emerging markets closer to major developed economies.
KEMX presents one intriguing route into the space. The strategy tracks the EGAI Emerging Markets ex-China Index for a 24 basis point (bps) fee. In doing so, it looks for large and mid-cap firms weighting by market cap. It avoids China, allowing investors to choose a more tailored China ETF for their portfolios than getting exposure via a broad ETF.
What’s more, KEMX is sending a strong buy signal per YCharts. The strategy’s price as of February 1st sat around $28, which sat well above its Simple Moving Averages (SMAs). Its price sat above both its 50 and 200-day averages of $27.77 and $26.61respectively. That suggests some potent momentum that could intrigue investors.
KEMX has done reasonably well over the last three months. The strategy has returned 12.4% over that period per VettaFi data. That has outperformed both its ETF Database Category and Factset Segment averages. Taken together, KEMX’s approach to emerging markets stands out in the emerging market ETF landscape and can provide one route into the space for curious investors.
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