Could emerging markets be an exciting opportunity in 2024? With 2023 drawing to a close, investors may be on the lookout for new ideas. Especially as the U.S. economy continues to digest the battle between inflation and interest rates, avoiding a possible slowdown there could appeal. Emerging markets would benefit from a weakening dollar, too. Taken together, those factors may speak to considering an emerging markets ETF like KEMX.
The KraneShares MSCI Emerging Markets ex China Index ETF (KEMX ) tracks the EGAI Emerging Markets ex-China Index. The emerging markets ETF has picked up $13.8 million in net flows over the last month, per VettaFi. At the same time, it has returned a very solid 10.4% over the last three months, according to Logicly data.
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So, what about its approach makes it a particularly appealing route into emerging markets? First, KEMX eschews China investments for other emerging markets options. So while an investor may make a China allocation via other ETFs, KEMX can complement those holdings.
KEMX’s index focuses on large and midcap firms, weighting by market cap. Currently, the emerging markets ETF includes Taiwan, India, and South Korea as its top three nations by weight. That has led it to invest in areas like semiconductors, financial firms, and more.
That broad spanning approach, looking for larger, potentially healthier firms, could help KEMX complement well-known names like Taiwan Semiconductor Manufacturing (TSM) with firms from other areas. At the same time, exposure to up-and-coming nations like India can help quite a bit, too. With emerging markets investing offering exposure to growing middle classes that could benefit from a weakening dollar. that could position an emerging markets ETF like KEMX to start 2024 well.
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