Matthews Emerging Markets Discovery Active ETF (MEMS) seeks to provide long-term capital appreciation by investing in small- and mid-cap companies in emerging markets. The fund focuses on discovering undervalued growth opportunities in developing economies across Asia, Latin America, and other emerging regions through active stock selection.
How It Works
MEMS employs an actively managed, bottom-up investment approach where portfolio managers conduct fundamental research to identify promising small- and mid-cap companies in emerging markets. The fund typically holds 40-80 concentrated positions, with higher allocations to the managers' highest-conviction ideas. Rebalancing occurs as needed based on valuation changes and new opportunities. The strategy emphasizes companies with strong growth potential, improving fundamentals, and reasonable valuations that may be overlooked by larger institutional investors.
Key Features
- Active management by Matthews Asia specialists with deep emerging markets expertise and on-ground research capabilities
- Focus on small- and mid-cap discovery opportunities often missed by passive emerging market ETFs
- Recently launched fund with 0.00% expense ratio, though this promotional rate may increase over time
Risks
- This ETF can lose significant value during emerging market selloffs, potentially declining 40-60% during crisis periods like currency devaluations or political instability
- Small- and mid-cap focus increases volatility risk, as these companies typically experience larger price swings than established large-cap stocks
- Currency fluctuations can substantially impact returns when emerging market currencies weaken against the U.S. dollar, reducing fund value even if local stocks perform well
Who Should Own This
Best suited as a satellite holding (5-15% of equity allocation) for aggressive growth investors with 7+ year time horizons and high risk tolerance. Appropriate for investors seeking emerging markets exposure beyond large-cap companies and comfortable with active management. Requires patience for manager's stock-picking strategy to outperform during volatile periods.