KraneShares MSCI Emerging Markets Ex China Index ETF (KEMX) seeks to track the MSCI Emerging Markets Ex China Index, which measures the performance of large- and mid-cap stocks across emerging market countries while completely excluding Chinese companies. This geographic-focused equity ETF provides diversified exposure to developing economies outside of China.
How It Works
KEMX uses a passively managed, market-capitalization-weighted approach that mirrors its benchmark index composition. The fund holds stocks from emerging markets including India, Taiwan, South Korea, Brazil, and other developing countries, with weightings proportional to each company's market value. Rebalancing occurs quarterly to maintain alignment with index changes and country allocation targets. The strategy systematically excludes all Chinese mainland and Hong Kong-listed companies to provide pure non-China emerging market exposure.
Key Features
- Only major ETF offering pure emerging markets exposure without any Chinese companies, addressing geopolitical concentration concerns
- Provides access to high-growth economies like India, Taiwan, and Brazil through single ticker with broad diversification
- Launched in 2019 to meet investor demand for China-free emerging market strategies amid trade tensions
Risks
- This ETF can lose significant value during emerging market selloffs, potentially declining 40-50% in severe downturns due to higher volatility than developed markets
- Currency fluctuations can amplify losses when local currencies weaken against the U.S. dollar during global risk-off periods
- Political instability, regulatory changes, or economic crises in major holdings countries like India or Taiwan could cause sharp declines
Who Should Own This
Best suited as a satellite holding (5-15% of equity allocation) for investors with high risk tolerance and 5+ year time horizons seeking emerging market diversification without China exposure. Appeals to investors concerned about geopolitical risks or wanting to complement separate China allocations through targeted geographic positioning.