The EGShares Emerging Market Core Ex-China ETF (XCEM) began trading earlier this month at the same time Chinese markets were imploding. Marten Hoekstra, CEO of Emerging Global Advisors, said the timing of the fund’s launch was serendipitous, although it proved the need for a better option to invest in often volatile emerging market stocks. ‘You are finding a lot of investors who say that they understand China is really important and drives a lot of things, but they might not want to own that much or maybe they want to control the way they own that much,’ said Hoekstra. The XCEM tracks the price and yield performance of the EGAI Emerging Markets ex-China Index. The EGAI Emerging Markets ex-China Index measures the stock performance of up to 700 companies spread across 20 countries, excluding companies domiciled in China and Hong Kong. Companies are selected and weighted according to free-float market capitalization. In terms of country exposure, South Korea makes up 18% of the fund’s assets, followed by Taiwan at 16% and Brazil at nearly 14%, as of the start of August. In terms of its largest sector holdings, the XCEM is not heavy on commodity companies despite its emerging market base. It holds 28% of its assets in financials, 13% in information technology stocks, 13% in industrials and 11% in consumer discretionary names.
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