Investing abroad? Opportunities abound in emerging markets, but one particular emerging markets ETF is standing out right now. Sending both tech chart and performance signals, (KEMX ), the KraneShares MSCI Emerging Markets ex China Index ETF, is doing well in a complicated space. Its approach may appeal to investors looking to add exposure to foreign equities.
See more: Emerging Markets: Honing a China Allocation
KEMX tracks the MSCI Emerging Markets ex-China Index for a 24 basis point (bps) fee. The strategy’s index focuses on large and mid-cap firms within emerging markets outside of China. While China remains a more attractive investment area than media headlines might suggest, an emerging markets ETF without direct exposure therein may serve investor needs right now.
KEMX selects and weights its constituents by market cap. In doing so, it has crafted a portfolio in which Taiwan, India, and South Korea lead as the top three markets. While it leads off global tech leader Taiwan Semiconductor Manufacturing (TSM), it holds financials and other types of firms too.
That strategy has done well for the emerging markets ETF. It has returned 18.9% over one year, outperforming both its ETF Database Category and FactSet Segment averages. It has outperformed the latter by almost double, too.
Its tech chart, however, may stand out the most as an indicator. When a security’s price rises above its Simple Moving Averages (SMAs), that indicates solid momentum. KEMX’s price has risen above both its 50 and 200-day SMAs. Moreover, the ETF’s 50-day SMA has sat above its 200-day SMA for months, supporting continued upward momentum.
Why look to emerging markets in the first place? Global supply chains are shifting following lessons learned during the pandemic. Meanwhile, the end of China’s decades-long hot streak of rampant growth in exchange for simply very good growth is leading money to other up-and-coming economies. Taken together, KEMX may appeal as an option for investors looking at the space.
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