Emerging Market Ex China ETF Launches

KraneShares rolled out an ETF that allows EM investors to skip the China exposure.

Reviewed by: Heather Bell
Edited by: Heather Bell

On Friday, KraneShares—an issuer focused mainly on offering different types of exposure to China’s markets—rolled out an ETF that offers broad emerging market exposure except for China. The KraneShares MSCI Emerging Markets ex China Index ETF (KEMX) covers securities from 23 emerging markets, just not those from China issuers based in Hong Kong or mainland China.

The fund comes with an expense ratio of 0.59% and lists on the NYSE Arca exchange.

China and Hong Kong represent roughly 30% of the portfolio of the $61 billion iShares Core MSCI Emerging Markets ETF (IEMG), and many investors are uncomfortable having one country hold so much sway over the generally more volatile emerging market space.

However, KEMX does not appear to be the first fund to track its underlying index. In July 2017, BlackRock rolled out the iShares MSCI Emerging Markets ex China ETF (EMXC), which seems to track the same cap-weighted MSCI Emerging Markets ex China Index. EMXC charges less than KEMX, at 0.49%, but has only accumulated $15 million in assets under management.

Both funds list South Korea and Taiwan as their most heavily weighted countries.

Contact Heather Bell at [email protected]

Heather Bell is a former managing editor of etf.com. She has also held editorial positions at Dow Jones Indexes and Lehman Brothers. Bell is a graduate of Dartmouth college and resides in the Denver area with her two dogs.