Investment manager BlackRock will expand its iShares exchange-traded fund (ETF) suite with the launch of a fund designed to provide exposure to emerging markets beyond China.
The iShares MSCI Emerging Markets ex China ETF (ASX code: EMXC) will track the index of the same name and will be introduced onto the Australian Securities Exchange (ASX) later this month with a management fee of 25 basis points.
The fund will target large and mid-cap emerging market equities, with its largest holdings in technology, financial, materials and industrial companies drawn from 12 developing economies.
“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,” BlackRock Australasia head of wealth Chantal Giles said.
“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.”
BlackRock Australasia iShares ETF and index investments specialist Tamara Stats said the change in perspective towards emerging markets resulted in the launch of EMXC, which can help meet the needs of investors seeking long-term growth and diversification in the asset class.
“While investors often have specific investment views on China, there is a broad range of opportunities across emerging markets outside China that may warrant a separate allocation,” Stats stated.
“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. This represents a structural long-term change which has traditionally favoured China only, but now we see a broader base of emerging market countries benefiting from this shift.
“EMXC offers Australian advisers and investors the choice to capture this opportunity set, providing the potential for higher returns that are uncorrelated to developed markets and serving as a source of portfolio diversification.”
The launch of EMXC follows the release of three iShares ETFs in February focusing on large and mid-cap developed global companies outside of Australia.