Vanguard files for new ex-China emerging markets ETF

Vanguard files for new ex-China emerging markets ETF

Vanguard has filed a preliminary prospectus with the SEC for a new exchange-traded fund (ETF) that will offer exposure to emerging markets, excluding China. The Vanguard Emerging Markets ex-China ETF will track the FTSE Emerging ex-China Index, an index that omits China while maintaining broad exposure to the rest of the developing world [1].

This move comes at a time of heightened geopolitical tensions between the U.S. and China. President Donald Trump's recent tariffs on Chinese goods, concerns about the Chinese government's interventions in its domestic economy, and the risk of conflict over Taiwan have all contributed to investor wariness of the Chinese market environment [1].

Traditional emerging markets ETFs, such as the iShares Core MSCI Emerging Markets ETF (IEMG) and the Vanguard FTSE Emerging Markets ETF (VWO), have significant exposure to China and Taiwan. Over the past five years, these funds have lagged the Vanguard Total International Stock ETF (VXUS) in returns [1].

In response to these concerns, more investors have turned to emerging markets strategies that exclude China altogether. The iShares MSCI Emerging Markets ex China ETF (EMXC), which launched in 2017, has seen its assets grow from $3 billion at the start of 2023 to $14 billion today [1].

Vanguard's new ETF aims to tap into this growing demand. It will charge a fee of just 0.07%, well below the 0.25% fee of EMXC. The new fund is expected to have a similar exposure to EMXC, with heavy allocations to India (33%) and Taiwan (around 25%) [1].

The filing indicates that Vanguard sees a growing appetite for emerging markets without China. The new ETF is expected to launch later this summer [3].

References:
[1] https://www.etf.com/sections/news/vanguard-files-new-emerging-markets-ex-china-etf
[2] https://finance.yahoo.com/news/vanguard-files-emerging-markets-ex-220000161.html
[3] https://ca.finance.yahoo.com/news/vanguard-files-ex-china-emerging-214903169.html