Matthews Emerging Markets Sustainable Future Active ETF (EMSF) seeks to invest in emerging markets companies positioned to benefit from or contribute to sustainable development themes. This actively managed thematic ETF targets businesses addressing environmental challenges, social progress, and governance improvements across developing economies in Asia, Latin America, and other emerging regions.
How It Works
EMSF employs active fundamental research to identify emerging markets companies aligned with sustainable development goals, including clean energy, healthcare access, financial inclusion, and resource efficiency. The fund's portfolio managers use bottom-up stock selection rather than tracking an index, allowing flexibility to concentrate in highest-conviction positions. Holdings typically range from 30-60 companies with geographic diversification across multiple emerging markets. Rebalancing occurs as needed based on fundamental analysis and sustainability criteria changes.
Key Features
- Active management allows selective exposure to sustainability leaders rather than broad emerging markets index tracking
- Thematic focus on companies solving environmental and social challenges in developing economies creates differentiated exposure
- Recently launched in September 2023, representing Matthews' expertise in Asian and emerging markets sustainable investing
Risks
- This ETF can lose value if emerging markets currencies weaken against the dollar, potentially amplifying losses by 10-20% beyond stock declines
- Active management risk means the fund may underperform passive emerging markets ETFs if stock selection proves incorrect over time
- Emerging markets volatility can cause 40-60% declines during global crises, with sustainability-focused companies potentially facing additional regulatory changes
Who Should Own This
Best suited as a satellite holding (5-15% of portfolio) for investors with high risk tolerance and 5+ year time horizons seeking thematic exposure to sustainable development in emerging markets. Appropriate for ESG-conscious investors wanting active management and willing to accept higher volatility than developed market alternatives.