Active emerging markets ETFs showed their strength this year, tactically adding new exposure to counter challenges in volatile markets and outperforming passive benchmarks.
Advisors and end clients increasingly embraced actively managed ETFs in 2022, with the category gathering 14% of the net inflows despite managing just 4% of the asset base, according to Todd Rosenbluth, head of research at VettaFi.
While actively managed ETFs gained traction across asset classes, emerging markets are particularly complex and best accessed through active funds. Here are three active emerging markets ETFs to consider going into the new year.
1. Matthews China Active ETF (MCH )
MCH is a high-conviction equity portfolio that seeks companies benefiting from China’s domestic consumption. MCH uses an all-cap fundamental GARP approach driven by proprietary research and combines long-term core holdings with more opportunistic ideas to provide consistency through cycles.
MCH returned an impressive 26.3% during November, beating its benchmark, the MSCI China Index, by 379 basis points during the month. Over the past three months, MCH has declined just -0.6% compared to the benchmark’s decline of -8.1%, as of November 30.
2. Matthews Asia Innovators Active ETF (MINV )
MINV, a high-conviction, concentrated equity portfolio, invests in innovative companies in Asia ex-Japan, capitalizing on the new economy and rising disposable income in the region. MINV is worth consideration for investors who want a more thematic and concentrated approach.
MINV returned 18.9% in November, beating the benchmark MSCI All Country Asia Ex Japan by 339 basis points. MINV has declined -2.1% while the benchmark has declined -3.0% over three months, as of November 30.
3. Matthews Emerging Markets Equity Active ETF (MEM )
MEM invests in emerging market companies with perceived sustainable growth potential, capitalizing on consumption and innovation trends. The fund utilizes an all-cap, company-first approach, which emphasizes fundamental research over top-down country or sector allocation.
MEM returned 12.1% last month, beating the MSCI Emerging Markets Index by 26 basis points. Over three months, the margin between returns widens significantly: MEM has gained 5% while the benchmark has declined -2.2% as of November 30.
MCH, MINV, and MEM each charge 79 basis points.
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