Lyxor has launched an emerging market ETF which excludes companies based in China, the first product of its kind to be launched in Europe.
The Lyxor MSCI Emerging Markets ex China UCITS ETF (EMXC) has listed on the Deutsche Boerse and London Stock Exchange with a total expense ratio (TER) of 0.30%.
EMXC, which shares the same ticker as its competitor in the US, provides exposure to 25 emerging equity markets such as Brazil, South Korea and India. Lyxor encourages buyers to invest in China via single-country ETFs which allows more precision in portfolio weighting.
China usually dominates the weighting of emerging market ETFs however, with its exclusion, South Korean equities is EMXC's largest exposure, making up 17% of the fund. Second to South Korea is Taiwan with 15.9% and then India with 13%. Despite Russian equity ETFs’ significantly positive performance in H1 2019, the country only has 6% weighting of EMXC.
Lyxor says China is one of the fastest growing economies and has even more potential to expand in the future, so being grouped with smaller developing countries in ETFs doesn’t enable investors to allow China to play a bigger role in their portfolios.
Chanchal Samadder, head of equities at Lyxor ETF, commented: “This new ETF allows investors to gain a broad exposure to some of the world’s most dynamic developing countries and, at the same time, make their own independent allocations to China.”