Matthews Emerging Markets ex China Active ETF (MEMX) seeks to provide long-term capital appreciation by investing in equity securities of companies located in emerging market countries, specifically excluding China. This actively managed emerging markets ETF focuses on developing economies across Asia, Latin America, Eastern Europe, and Africa while avoiding Chinese market exposure.
How It Works
MEMX employs active portfolio management using fundamental research to select stocks across emerging markets excluding China. The fund managers conduct bottom-up analysis to identify undervalued companies with strong growth potential in countries like India, Taiwan, South Korea, Brazil, and others. Portfolio construction emphasizes quality companies with sustainable competitive advantages, typically holding 40-80 positions with quarterly rebalancing based on market opportunities and valuation changes.
Key Features
- Actively excludes China exposure, differentiating from broad emerging markets ETFs that typically allocate 25-35% to Chinese stocks
- Launched in January 2023 with no expense ratio currently listed, potentially offering cost-competitive emerging markets access
- Managed by Matthews Asia specialists with decades of experience in Asian and emerging market equity research and selection
Risks
- This ETF can lose value during emerging market volatility, potentially declining 40-60% during global risk-off periods like 2008 or 2020
- Currency fluctuations can significantly impact returns as most holdings trade in local currencies that may weaken against the U.S. dollar
- Active management risk means the fund may underperform passive emerging markets benchmarks if stock selection proves unsuccessful over time
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 markets exposure without China concentration risk. Appropriate for investors wanting active management in volatile emerging markets or those with geopolitical concerns about Chinese equity investments.