ETFdb Logo
ETFdb Logo
  • ETF Database
  • Channels
    • Active ETF
    • Beyond Basic Beta
    • China Insights
    • Climate Insights
    • Commodities
    • Core Strategies
    • Crypto
    • Direct Indexing
    • Disruptive Technology
    • Energy Infrastructure
    • ETF Building Blocks
    • ETF Education
    • ETF Strategist
    • Financial Literacy
    • Fixed Income
    • Gold/Silver/Critical Minerals
    • Innovative ETFs
    • Institutional Income Strategies
    • Leveraged & Inverse
    • Managed Futures
    • Market Insights
    • Modern Alpha
    • Multifactor
    • Night Effect
    • Portfolio Strategies
    • Responsible Investing
    • Retirement Income
    • Richard Bernstein Advisors
    • Tax Efficient Income
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
  • Research
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF of the Week Podcast
    • ETF Prime Podcast
    • Video
  • Company
    • About VettaFi
    • Get VettaFi’ed
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. China Insights Channel
  2. With This EM ETF, Augment China Exposure
China Insights Channel
Share

With This EM ETF, Augment China Exposure

Tom LydonApr 14, 2023
2023-04-14

Investors holding traditional pure beta emerging markets exchange traded funds know that they’re heaping helpings of China exposure and comparatively small portions of exposure to other developing economies.

Obviously, that concentration risk is amplified when holding China-specific ETFs, but investors can offset some of that risk with funds such as the KraneShares MSCI Emerging Markets ex-China Index ETF (KEMX C+). KEMX follows the MSCI Emerging Markets ex China Index, which can allocate to as many as 23 ex-China emerging markets.

While China is the world’s second-largest economy and a lynchpin in standard emerging markets ETFs, that doesn’t mean KEMX and its index lack for diversification.

“The MSCI Emerging Markets ex China Index captures large and mid cap representation across 23 of the 24 Emerging Markets (EM) countries* excluding China. With 663 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country,” according to MSCI.

KEMX could be a pertinent idea today for investors seeking international equity allocations due to the ETF’s exposure to high-quality, tech-haven markets such as Taiwan and South Korea. Those two countries, which are among the least volatile in the MSCI Emerging Markets universe, combine for over 40% of KEMX’s geographic exposure.

“Elsewhere, we’re also seeing an encouraging set of developments in the semiconductors and technology hardware cycles, which matter for the Korea and Taiwan markets. Although end use demand in most segments remained very weak in the first quarter, we believe our thesis that we are passing through the worst phase of the cycle was confirmed by positive stock price reactions to news of production cuts by industry leaders,” noted Jonathan Garner, Chief Asia and Emerging Market Equity Strategist at Morgan Stanley.

Another benefit of KEMX is that the KraneShares ETF devotes over 19% of its weight to India, an advantage of roughly 600 basis points relative to the MSCI Emerging Markets Index. That’s pertinent because India — Asia’s third-largest — has been home to some of the best-performing emerging markets equities since the start of 2022.

“Valuations adjusted meaningfully lower in that timeframe and we think Indian equities are now poised to join in the rally from here on an improving economic cycle outlook, as well as heightened structural interest in the market by overseas investors. India continues to benefit from ongoing positive household formation, industrialization and urbanization themes which are well represented in domestic equity benchmarks,” concluded Garner.

For more news, information, and analysis, visit the China Insights Channel.

Loading Articles...
Our Sites
  • VettaFi
  • Advisor Perspectives
  • ETF Trends
Tools
  • ETF Screener
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Database Pro
More Tools
  • Financial Advisor & RIA Center
Explore ETFs
  • ETF News
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Information
  • Contact Us
  • Terms of Use and Privacy Policy
  • © 2023 VettaFi LLC. All rights reserved.

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X