Matthews Emerging Markets Equity Active ETF (MEM) seeks to provide long-term capital appreciation by actively investing in equity securities of companies located in or economically tied to emerging market countries across Asia, Latin America, Eastern Europe, and Africa. This geographic-focused strategy targets developing economies with higher growth potential than developed markets.
How It Works
MEM employs active portfolio management, with Matthews' research team selecting individual stocks based on fundamental analysis rather than tracking a benchmark index. The fund focuses on companies domiciled in or deriving significant revenue from emerging markets, with particular emphasis on Asian markets given Matthews' regional expertise. Portfolio construction emphasizes bottom-up stock selection with concentrated positions in the managers' highest-conviction ideas, typically holding 40-80 stocks with quarterly rebalancing based on market opportunities.
Key Features
- Active management by Matthews, a specialist emerging markets firm with 25+ years of Asia-Pacific investment experience and local research presence
- High 6.19% dividend yield suggests focus on income-generating emerging market stocks, unusual for growth-oriented developing market strategies
- Recently launched in 2022, offering newer approach to emerging markets investing without legacy performance constraints or style drift
Risks
- This ETF can lose value when emerging market currencies weaken against the dollar, as unhedged foreign investments face additional currency translation losses
- Active management risk means the fund may underperform passive emerging market ETFs if stock selection proves poor, with higher fees amplifying underperformance
- Emerging markets can decline 40-60% during global crises due to capital flight, political instability, and reduced commodity demand from developed economies
Who Should Own This
Best suited as a satellite holding (5-15% of equity allocation) for aggressive investors with 7+ year time horizons seeking emerging markets exposure with active management. High risk tolerance required due to developing market volatility and currency fluctuations. Appeals to investors wanting professional stock selection over passive index exposure in complex emerging economies.