WisdomTree Emerging Market ETF Excludes China

WisdomTree rolled out an exchange-traded fund Thursday that covers emerging markets but excludes China. The WisdomTree Emerging Markets ex-China Fund (XC) is the fourth fund of this type to enter the U.S. market; however, it includes an environmental, social and governance overlay in its methodology. 

XC lists on the NYSE Arca with an expense ratio of 0.32%. 

The new fund tracks an index of 16 markets that includes neither China nor Hong Kong. At launch, India had the largest weighting of any country in the index, at 28.51%, according to the issuer’s website.  

The underlying index excludes state-owned enterprises. It can also exclude companies that violate widely accepted international norms under the United Nations’ Global Standards Screening and companies involved in the tobacco, weapons or thermal coal industries, the prospectus says.  

The final portfolio is weighted by a modified market capitalization approach that keeps the weights of countries close to their weights in the original selection universe, the document notes. 

Of the three other emerging market ex-China ETFs currently trading, the largest is the $2.3 billion iShares MSCI Emerging Markets ex China ETF (EMXC). That fund is down more than 20% year to date but has still outperformed the iShares Core MSCI Emerging Markets ETF (IEMG), which has fallen more than 21% during the same period.  

China’s economy was greatly affected by the COVID-19 pandemic and research released this week by the Asian Development Bank indicates China’s GDP growth will trail that of other emerging markets in Asia for 2022 and 2023, something that hasn’t happened in more than 30 years.  

Contact Heather Bell at [email protected]