EMXC aims to offer Australian investors a higher allocation to the emerging markets universe outside of China, providing the opportunity for greater global diversification.
In mitigating the high concentration of China within the composition of the MSCI Emerging Markets Index, BlackRock clarified that the ETF enables investors to maintain their exposure to emerging markets while having greater flexibility in their China allocation.
The ETF has a management fee of 0.25 per cent.
Chantal Giles, head of wealth for BlackRock Australasia, said EMXC will be a “granular building block” for advisers and investors seeking 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,” Giles explained.
Namely, 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.”
Expounding on this, Tamara Stats, iShares ETF and index investments specialist, said that there is a broad range of opportunities across emerging markets outside China that may warrant a separate allocation.
“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 EM countries benefiting from this shift,” Stats clarified.
“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.”
EMXC will join the three other ETFs that BlackRock launched earlier this year to help investors access their preferred investment style in line with their broader objectives in a low-cost way.
The funds – iShares MSCI World ex Australia Momentum ETF (IMTM), iShares MSCI World ex Australia Value ETF (IVLU), and iShares MSCI World ex Australia Quality ETF (IQLT) – were made available on Cboe in February and marked the inaugural iShares products listed on Cboe in Australia.
