Emerging Markets Ex China

I am sure many of you are familiar with Pension Craft on youtube, his recent video linked below got me thinking (link below). I currently invest in the MSCI world with a small tilt towards value. I would be interested in adding emerging markets to my portfolio without allocating anything to China.

Lyxor and Ishares both offer UCITS compliant ETFs, is there a chance those would be made available for invest engine users innthe near future?

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I would be interested in this as well. After Russia invaded Ukraine, I can’t help but be reminded of the possibility of China invading Taiwan. Whether I’m worried enough to exclude China is a different thing, but it would be nice to have the option to invest in emerging markets ex China.

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I suggested this back in January (ETF Suggestion: Emerging Market Ex-China Fund). Let alone the fact that China has lost the potential of growth, at least in short term, the substantial weight of China market among all the emerging market funds make it hard to really diversify the China factor out.

I actually have just switched all my emerging market funds to country specific (e.g. India) or region specific (e.g. APAC) funds so I may still keep some investment in emerging markets when avoiding China. That is definitely not ideal, but as InvestEngine has not provided one single ex-China fund option, that’s is the only option I have.

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Thank you for your ETF suggestions!
We are always looking to expand our range and it’s great to know what our clients prefer to see on the platform.
Please be assured that your request has been forwarded to the relevant team, who will look into the possibility of adding the funds.
If you ever have any other ETFs you would like to see added, be sure to let us know here or by contacting us via support@investengine.com.

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Thank you Paul, I emailed prevously. It seems there is appetite for this fund on the platform, are we likely to see this an an option soon?

The MSCI India/Poland/Mexico funds are very expensive and not really an option for those of us looking to keep costs at a minimum.

Keep an eye here as we always post new additions to our offering here whenever they go live.

All, I know you are talking about EM ex-China but check out EMGU.

It’s MSCI so it includes South Korea.

It’s IMI so it invest in the total investable market eg it includes small cap stocks not just mid and large cap.

It’s only 24% in China which is roughly 1/5 or 6% less than usual.

I invest in it myself. Some controlled exposure to China is a good thing I think, and this offers it. Countries doing well in EM were beaten down last year. China will improve. It’s too big to ignore in my humble opinion.

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That’s an interesting one Carl, thanks. I’ve added that (EMIM for reinvesting) to one of my portfolios and my current EM ETF is not doing very well whereas a small company one I have is doing very well so with the change of region focus and inclusion of Small, this could be a nice one.

My portfolio is factor weighted for Value and Small. Historically these factors have paid a premium over the long run. If you’re interested, read this…

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Thanks, will take a look at that. Always keen to learn more with investing.

“Investors ponder the ‘Japanification’ of China”

You like it or not, the short term risk of investing in China is high and the value of any such investment, fair or not, has to be suppressed at least in the short run when that is the market sentiment, whether you find it rational or not. Don’t tell us that in the long run things will turn great (the famous quote “in the long run, we are all…”). We are not asking InvestEngine to set up its own ex-China fund - there are already plenty around. Just give us one for us to choose from at least.

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Is there an update of whether an EM Ex China find will be added?

I decided to compare SEGM (my current holding) and EMGU. They are both IMI EM funds from the same provider with the same TER. SEGM is the ESG version.

Bear in mind I’m responding to a five-month-old comment, so naturally some changes have happened.

SEGM currently holds 21.5% Chinese equity.
EMIM holds 21%.

SEGM holds 2,309 holdings.
EMIM holds 3,120 holdings.

So EMIM is more diversified and slightly less exposed to China.

It is of course up to the investor to decide for themselves whether these are good things, along with whether they value ESG screening. (Personally, I do, as long as there’s no extra fees)

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Could create your own EM Ex China portfolio on IE?

I have LTAM - Latin America EM on IE, add a bit of FRIN for India, could also add a bit of South Africa etc.

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It would be possible but a lot of work and the fees on these ETFs are high.

LTAM and FRIN fees are ok at 0.2% and 0.19% some of the other EM country ETFS are quite a bit higher. Although think there’s a good chance China could be close to a bottom and good time to just buy EM with China.

Looking at a EM ETF country weightings -

China 22.60%
India 17.18%
Taiwan 16.42%
South Korea 12.23%
Saudi Arabia 4.27%
Mexico 2.58%
Brazil 2.56%
South Africa 2.33%
Indonesia 1.89%
Other 17.94%

Take out China, here are the other country ETFs -

India - FRIN
Taiwan - HTWN
South Korea - KRWL
Saudi Arabia - not on IE
Mexico and Brazil - LTAM
South Africa - SRSA more expensive than others at 0.65%
Indonesia - HIDR

^ I actually hold FRIN, LTAM, SRSA and HIDR as well as SEGM. South Africa isn’t doing too well at the moment, and is expensive, but the others have been good buys for me. I’m personally very much a “go big on emerging markets” guy.

While South Korea and Taiwan are freer and friendlier than China, I think they’re also basically “developed” markets that have more in common with Japan than with Mexico, Brazil, and Indonesia.

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LTAM holder here & it’s a nice dividend also :+1:

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@tom.winterton are there any plans to add this ETF? I have an allocation in my SIPP that I would like to transfer over when that feature is ready.

Hi Dima, looka like EXCS is now available!

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