This is a passive ETF that tracks an emerging market equity index excluding China. It holds large- and mid-cap stocks from emerging markets such as Taiwan, South Korea and India on a market-cap-weighted basis, providing exposure equivalent to a standard emerging markets ETF with the China weighting removed.

It suits long-term diversified investors who want emerging market exposure but prefer to manage China risk separately.

It is a passive (index-tracking) ETF managed by BlackRock.

The fund holds the constituents of the emerging markets index excluding China in proportion to their market-cap weights, tracking the performance of emerging markets as a whole. Because it is a standard emerging markets index with Chinese stocks removed, the weightings of markets such as Taiwan, South Korea and India are relatively larger.

• Emerging market exposure with the China weighting removed
• Regional composition with a large technology sector weighting

Assets under management (AUM) stand at $26.4B, and the expense ratio is 0.25% per year.

The key difference from standard emerging markets ETFs such as IEMG and VWO is the removal of China exposure, which makes the fund useful for strategies that adjust the China weighting separately.

Its performance tends to be driven by overall risk appetite toward emerging markets, the strength of the dollar and the semiconductor cycle. With large Taiwan and South Korea weightings, it can also be relatively sensitive to the global technology cycle, and its short-term volatility moves in line with the emerging market environment.

Fund flows tend to continue as investors seek to separate out China exposure and use the fund as a vehicle for emerging market allocation. When sentiment toward emerging markets improves, inflows can also appear across core emerging markets ETFs in general.

Its strength is diversification across emerging markets excluding China, while its concentration in specific regions such as Taiwan and South Korea and in the technology sector is pointed to as a weakness.

IEMG, VWO, EEM and SPEM shown in the table are standard emerging markets ETFs that include China, and the key difference from EMXC is whether China exposure is present. Meanwhile, combining IEMG, a standard emerging markets ETF from the same issuer, with MCHI, a China-only ETF, also makes it possible to adjust the China weighting yourself, and investors who want to focus on India can also consider single-country ETFs such as INDA.

These are the points to review before investing in EMXC. The concept of emerging market exposure excluding China is clear, but regional and sector concentration and currency factors should be checked thoroughly in advance.

Concentration in specific regions and the technology sector, along with emerging market currency fluctuations, are the main drivers of short-term volatility. When risk appetite toward emerging markets contracts, short-term losses can grow even for a core asset.

It is a suitable choice for investors who want diversified emerging market exposure with China risk separated out. Those who prefer standard exposure that includes China can consider IEMG or VWO, and those who want to adjust the China weighting directly can consider a combination with MCHI.