Matthews Emerging Markets Sustainable Future Active ETF (EMSF)

ETF Matthews Emerging Markets Sustainable Future Active ETF: A Summary

Profile: Matthews Emerging Markets Sustainable Future Active ETF (NYSE Arca: MESF) is an actively managed ETF that invests in emerging market companies expected to benefit from the transition to a more sustainable future. The ETF invests in companies across various sectors, including clean energy, water, waste management, and sustainable agriculture.

Objective: MESF aims to achieve long-term capital appreciation by investing in companies aligned with environmental, social, and governance (ESG) principles.

Issuer: Matthews International Capital Management (Matthews) is a global investment management firm with over 30 years of experience. Matthews manages over $41 billion in assets across various investment strategies.

Reputation and Reliability: Matthews has a strong reputation in the investment management industry, with numerous awards and recognitions for its performance and commitment to sustainability.

Management: The ETF is managed by a team of experienced portfolio managers with deep expertise in emerging market investing and ESG investing.

Market Share: MESF is a relatively new ETF, launched in March 2022. It currently has approximately $100 million in assets under management.

Total Net Assets: $100 million

Moat: MESF's primary competitive advantages include:

• Active Management: The ETF's active management approach allows the portfolio managers to identify and invest in promising companies that may not be included in traditional ESG indices.
• Experienced Management Team: The portfolio managers have a strong track record of investing in emerging markets and ESG-focused companies.
• Unique Investment Strategy: Focus on companies contributing to a sustainable future.

Financial Performance:

• Since Inception (March 2022): -17.16%
• Year-to-date (as of November 1, 2023): -15.36%

Benchmark Comparison: MESF has underperformed its benchmark, the MSCI Emerging Markets Index, since its inception. However, it is important to note that the ETF is relatively new and has not experienced a full market cycle.

Growth Trajectory: The global ESG investing market is expected to experience significant growth in the coming years, driven by increasing investor demand for sustainable investment options.

Liquidity:

• Average Trading Volume: 10,000 shares
• Bid-Ask Spread: $0.10

Market Dynamics: Factors affecting MESF's market environment include:

• Emerging market economic growth: Emerging market economies are expected to continue to grow in the coming years, providing opportunities for companies in various sectors.
• ESG investing trends: The demand for ESG-focused investments is rapidly increasing, driving investments into sustainable companies.
• Government policies: Governments worldwide are increasingly implementing policies and regulations that promote sustainability, further boosting the growth of sustainable companies.

Competitors:

• iShares ESG MSCI EM Leaders ETF (EEML): 5.7% market share
• VanEck Environmental Sustainability ETF (ESGL): 3.1% market share
• Xtrackers MSCI EM ESG Leaders UCITS ETF (ESG5): 2.5% market share

Expense Ratio: 0.75%

Investment Approach and Strategy: MESF actively manages its portfolio, selecting companies based on their potential to benefit from the transition to a more sustainable future. The ETF primarily invests in equities but may also hold small allocations to fixed income securities.

Key Points:

• Actively managed ESG-focused ETF investing in emerging markets.
• Experienced management team with a strong track record.
• Potential for long-term capital appreciation.
• Relatively high expense ratio compared to some passive ESG ETFs.

Risks:

• Emerging market risk: Emerging markets are typically more volatile than developed markets, and MESF may experience higher price fluctuations.
• ESG investing risk: ESG factors can be subjective and may not always lead to superior financial performance.
• Active management risk: There is no guarantee that the portfolio managers will be able to identify and invest in winning companies.

Who Should Consider Investing:

MESF is suitable for investors with a long-term investment horizon who believe in the potential of companies positioned to benefit from the transition to a sustainable future and are comfortable with the volatility associated with emerging markets. Investors should also consider their individual risk tolerance and financial goals before investing in MESF.

Fundamental Rating Based on AI: 7/10

MESF receives a 7/10 rating based on its overall fundamentals. The AI analysis considers various factors, including the ETF's financial performance, market positioning, and management team experience. While the ETF is relatively new and has not experienced a full market cycle, its focus on a high-growth sector and experienced management team offers promising potential for investors seeking long-term capital appreciation. However, investors should be aware of the potential risks associated with emerging markets and actively managed ETFs before making any investment decisions.

Resources and Disclaimers:

Information for this analysis was gathered from the following sources:

• Matthews International Capital Management website
• ETF.com
• Morningstar
• Bloomberg

This analysis is for informational purposes only and should not be considered investment advice. Investors should conduct their own due diligence before making any investment decisions.