XSOE ETF: What Is It? Returns, Fees, Holdings, and Alternative ETFs Explained
An ETF with a strategy that excludes state-owned enterprises and invests only in private-sector companies in emerging markets. It is built mainly around large private-sector stocks in Taiwan, South Korea, and China, which removes the risk of government interference.
SubscribeWhat Is This ETF?
It tracks the WisdomTree Emerging Markets ex-State-Owned Enterprises Index and excludes state-owned enterprises (SOEs), defined as companies in which the government's stake exceeds a set threshold. It selects only private-sector companies in emerging markets and holds them on a market-cap-weighted basis.
It suits investors who want to avoid SOE risk in emerging markets and focus on private-sector growth companies.
It is a passively managed (index-tracking) ETF launched by WisdomTree in 2014.
How Does It Invest?
| Item | Details |
|---|---|
| Tracked Index | WisdomTree Emerging Markets ex-State-Owned Enterprises Index |
| Management Style | Passive (index tracking) |
| SOE Criteria | Excluded when the government stake exceeds a set threshold |
| Dividend Frequency | Quarterly |
| Expense Ratio | 0.32% |
Among companies listed in emerging markets, it excludes SOEs in which the government holds a stake above a set threshold, and holds the remaining private-sector companies on an adjusted market-cap-weighted basis. A cap on country weight deviations is applied to moderate concentration in any single country, and the portfolio is centered on private-sector companies in Taiwan, South Korea, and China.
- Excluding SOEs reduces the risk of government interference
- Offers pure access to private-sector growth stocks in emerging markets
Size and Costs
Assets under management (AUM) stand at $1.9B, and the Expense Ratio is 0.32% per year.
Unlike typical emerging-market ETFs in the same category, which carry a high weighting in SOEs, this fund is exposed only to private-sector companies, and that is the structural difference. Its fee level is somewhat higher than the category average.
Performance and Trends
1-Year Price Performance
Dividend & Yield
52-Week Price RangeReturns tend to move with the overall economic cycle in emerging markets and with cycles of dollar strength and weakness. Because of its large weightings in Taiwanese semiconductors and Korean technology stocks, sentiment in the global technology sector has a considerable effect on short-term performance.
Demand for selective investment in emerging-market private-sector companies has remained steady among institutional and individual investors seeking to avoid SOE risk. Changes in the regulatory environment for Chinese private-sector companies, the direction of the dollar, and interest rate trends within emerging markets affect fund flows.
Strengths and Weaknesses
The differentiated strategy of excluding SOEs is its strength, but investors should be mindful of the fee level and the volatility typical of emerging markets.
💪 Key Strengths
⚠️ Points to Watch
Alternative ETFs and Related Products
ETFs compared within the same emerging-market category, as shown in the table, include FNDE, FRDM, PXH, EMGF, and GEM. FNDE uses a dividend-weighted strategy for emerging markets, while FRDM selects countries based on economic freedom, which shares a similar spirit with excluding SOEs. PXH is an emerging-market dividend-focused strategy suited to income-oriented investors. EMGF applies a multi-factor smart beta approach, and GEM offers broad emerging-market exposure. In addition, the purely passive emerging-market ETFs EEM and VWO can also be compared in terms of fees and breadth of exposure.
Peer Comparison ETFs| Ticker | Name | Price | Change | AUM | Total Expense Ratio | Dividend Yield | 1Y |
|---|---|---|---|---|---|---|---|
 FNDE | Schwab Fundamental Emerging Markets Equity ETF | $40.86 | -2.0% | $10.2B | 0.39% | 3.64% | +10.7% |
 FRDM | Freedom 100 Emerging Markets ETF | $63.19 | -0.7% | $3.3B | 0.49% | 1.86% | +34.0% |
 PXH | Invesco RAFI Emerging Markets ETF | $28.26 | -1.7% | $2.0B | 0.47% | 4.11% | +8.9% |
 EMGF | iShares Emerging Markets Equity Factor ETF | $66.48 | -0.1% | $1.8B | 0.26% | 2.17% | +13.8% |
 GEM | Goldman Sachs ActiveBeta Emerging Markets Equity ETF | $47.45 | -0.2% | $1.7B | 0.35% | 2.02% | +12.7% |
Top Holdings| Ticker | Name | Weight | Price | Change | Market Cap | P/E | Dividend Yield |
|---|---|---|---|---|---|---|---|
 MMK | State Street Prime Money Market ETF | - | $100.27 | +0.0% | $0.0M | - | 2.3% |
 FIVE | Five Below Inc | - | $230.00 | +3.0% | $12.7B | 20.6 | - |
| TSM | Taiwan Semiconductor Manufacturing ADR | 0.25% | $424.37 | +1.4% | $2.20T | 27.3 | 0.97% |
| SKHY | SK Hynix Inc ADR | 0.07% | $142.62 | +4.1% | $1.04T | 9.3 | 0.36% |
| BABA | Alibaba Group Holding Ltd ADR | 0.03% | $100.25 | +0.6% | $249.4B | 23.6 | 1.11% |
Investor Checkpoints
Here are the items to review before investing in XSOE. The concept of excluding SOEs is distinctive, but it is important to check the actual portfolio composition and cost structure as well.
| Checkpoint | What to Check | Current Status |
|---|---|---|
| 💵 Expense Ratio | Check the cumulative effect of fees over a long holding period | Higher than the category average |
| 🌍 Country Diversification | Check for concentration in particular emerging markets | Concentrated in private-sector stocks in Taiwan, South Korea, and China |
| 🏛️ SOE Criteria | Check the government stake criteria and whether they are reviewed regularly | Applied according to index rules |
| 💱 Currency Impact | Review the effect of emerging-market currencies and dollar exchange rate moves | No currency hedging applied |
Political risk, currency fluctuations, and changes in the regulatory environment, all typical of emerging markets, are the main causes of short-term volatility. Because the criteria for excluding SOEs depend on the judgment of the index provider, the portfolio composition may change if the inclusion criteria are revised.
If you want to reduce SOE risk when investing in emerging markets, XSOE is a differentiated option. However, it is important to confirm in advance whether you can accept the fee burden and emerging-market volatility.
SubscribeDisclaimer: This content is for informational purposes only and does not constitute investment advice. All investment responsibility lies with the investor.
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