BlackRock Australia has announced it intends to launch an emerging markets ex-China ETF to give advisers and investors with greater diversification.
The iShares MSCI Emerging Markets ex China ETF (EMXC) will be available on the ASX in late June and have a management fee of 0.25 per cent.
“The launch of EMXC furthers BlackRock’s commitment to expand its local iShares product suite, providing Australian advisers and investors with a granular building block for more precise emerging markets allocations,” the firm said.
The fund aims to offer Australian investors a higher allocation to the emerging markets universe outside of China, providing the opportunity for greater global diversification. It also seeks to mitigate the high concentration of China within the composition of the MSCI Emerging Markets Index which enables investors to maintain their emerging market exposure while having greater flexibility in their China allocation.
Chantal Giles, head of wealth at BlackRock Australasia, said: “EMXC will offer Australian advisers and investors with a more granular building block that provides greater flexibility in managing allocations to China and other emerging markets.
“Historically, investors have often viewed emerging markets as a single asset class. However, this perspective has evolved. There is now growing interest in country-specific allocations, such as China or India, in addition to broad emerging market exposures. This shift enables investors to make more precise investment decisions, considering macroeconomic factors, risk management and portfolio diversification.
“EMXC offers investors the opportunity to better reflect their individual preferences and convictions regarding China within their emerging markets allocation.”
Tamara Stats, iShares ETF and index investment specialist at BlackRock Australasia, added China may be a large constituent of the MSCI Emerging Markets Index, but that there are growing opportunities in other emerging market countries.
The largest country weights in the index currently are China at 27.1 per cent of the index followed by 18.1 per cent in India and 18 per cent in Taiwan. However, when China is removed as in the MSCI Emerging Markets ex China Index, then India jumps to a 24.8 per cent weighting followed by Taiwan at 24.7 per cent and South Korea at 15.8 per cent.
“As supply chains are globally rewired, countries such as India, Mexico and Brazil are capitalising on reshoring or friendshoring, while South Korea has increased its market share in battery manufacturing,” said Stats.
iShares has US$3.7 trillion in assets under management as of 31 March 2024 and over 1,400 products.
