SPDR MSCI Emerging Markets Fossil Fuel Reserves Free ETF (EEMX) seeks to track the MSCI Emerging Markets ex Fossil Fuels Index, which measures the performance of large- and mid-cap stocks across 24 emerging market countries while excluding companies that own fossil fuel reserves. This ESG-focused emerging markets equity ETF provides exposure to developing economies without direct fossil fuel exposure.
How It Works
EEMX uses a passively managed, market-capitalization-weighted approach that mirrors its benchmark index by screening out companies with proven or probable fossil fuel reserves. The fund rebalances quarterly to maintain alignment with index changes and ESG criteria. Holdings span emerging markets including China, Taiwan, India, and South Korea, with technology, financials, and consumer sectors typically representing the largest allocations among several hundred constituent stocks.
Key Features
- Excludes fossil fuel reserve-owning companies while maintaining broad emerging markets exposure across 24 countries
- ESG integration without sacrificing diversification, covering large- and mid-cap stocks in key developing economies
- State Street management with systematic fossil fuel screening methodology applied to MSCI emerging markets universe
Risks
- This ETF can lose value during emerging market selloffs, potentially declining 40-60% in severe downturns due to higher volatility than developed markets
- Currency fluctuations against the U.S. dollar can significantly impact returns as underlying holdings are denominated in local emerging market currencies
- ESG screening reduces investment universe and may cause performance divergence from broader emerging markets during fossil fuel sector rallies
Who Should Own This
Best suited as a satellite holding (5-15% of equity allocation) for ESG-conscious investors with 7+ year time horizons seeking emerging markets exposure without fossil fuel companies. High risk tolerance required due to emerging market volatility and currency exposure. Appropriate for investors wanting developing market growth potential while aligning with environmental values.