EGA launches EM ex China ETF

Sep 7th, 2015 | By | Category: Equities

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Emerging Global Advisors (EGA), a specialist US-based provider of emerging markets exchange-traded funds, has launched the EGShares EM Core ex-China ETF (XCEM) on the NYSE Arca. The ETF provides broad exposure to emerging market equities excluding China and Hong Kong.

EGA launches emerging markets ETF which excludes China

Excluding China leads to an ETF which is weighted primarily towards South Korea (pictured), Taiwan and Brazil.

According to EGA, by choosing a core emerging market exposure that excludes China, investors can decide separately how much to invest in China, as well as the style and particular vehicle with which they gain that exposure.

“In today’s market environment, some investors have noted that China comprises a significant portion of broad-based emerging market benchmarks. That portion is growing as index funds in the category plan to increase their allocations to China through A-shares,” said EGA President and Founder Robert C. Holderith. “We launched XCEM to deliver core emerging market exposure independently of China, giving investors an option to refine their portfolios in light of other China holdings or market developments.”

The fund tracks the EGAI Emerging Markets ex-China Index which was created by EGA Indices, a separate group within EGA. The index measures the performance of the 700 largest and most liquid emerging market companies which are not domiciled in China and Hong Kong. Companies are selected and weighted according to free-float market capitalisation.

“The XCEM fund is a strong fit for investors who are looking to be more conservative in their approach to China without sacrificing opportunities in other emerging markets,” added EGA Managing Director Jay McAndrew. “It also addresses the needs of investors who have a point of view on China and are looking for greater control over the size and style of their exposure to this market.”

There are no sector or regional weight restrictions on the fund. The top sector allocations are currently to finance (28.1%), IT (13.4%) and industrials (13.0%). By country, South Korea (18.3%), Taiwan (15.8%) and Brazil (13.6%) are the most heavily weighted.

The fund has a gross expense ratio of 0.70% and a net expense ratio of 0.35%. The net charge excludes the fund’s advisory fee of 0.35% and will remain in effect until 11 August 2017.

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