WisdomTree True Emerging Markets Fund (XC) seeks to track the WisdomTree Emerging Markets ex-China ex-A-Shares Index, which measures the performance of emerging market companies while excluding Chinese mainland companies and A-shares. This geographic equity ETF provides targeted exposure to developing economies outside China's influence.
How It Works
XC uses a passively managed, market-capitalization-weighted approach that mirrors its benchmark index composition. The fund excludes all Chinese companies and A-shares to reduce concentration risk and geopolitical exposure while maintaining broad emerging markets diversification. Holdings are rebalanced quarterly to maintain index alignment. The strategy focuses on companies domiciled in countries like India, Taiwan, South Korea, and Brazil, providing pure-play emerging markets exposure without China's outsized influence.
Key Features
- Eliminates China concentration risk that typically represents 30-40% of traditional emerging markets ETFs, reducing geopolitical exposure
- Launched in 2022 as newer fund addressing investor demand for China-free emerging markets exposure strategies
- Zero expense ratio currently listed, though this may reflect promotional pricing or data reporting issues for newer fund
Risks
- This ETF can lose value during emerging markets volatility, potentially declining 40-50% during global risk-off periods like 2008 or 2020
- Currency fluctuations can significantly impact returns as underlying holdings trade in local currencies without hedging protection mechanisms
- Political instability, regulatory changes, or economic crises in key markets like India or Taiwan could cause substantial losses
Who Should Own This
Best suited as satellite holding (5-15% of equity allocation) for investors with high risk tolerance and 5+ year time horizons seeking emerging markets exposure without China risk. Appropriate for investors concerned about geopolitical tensions or wanting to diversify away from China-heavy traditional EM funds.