Matthews Emerging Markets Ex China Active ETF (MEMX)

ETF Matthews Emerging Markets Ex China Active ETF (MXC) Overview

Profile

MXC is an actively managed ETF that invests in equity securities of companies located in emerging markets excluding China. The fund primarily focuses on large and mid-cap companies across various sectors, aiming to achieve long-term capital appreciation. It utilizes a bottom-up stock selection approach, seeking opportunities in companies with strong growth potential and competitive advantages.

Objective

The primary investment goal of MXC is to outperform the MSCI Emerging Markets Ex China Index by investing in a diversified portfolio of emerging market companies outside of China.

Issuer

Matthews International Capital Management, LLC (Matthews)

• Reputation and Reliability: Founded in 1991, Matthews is a prominent investment management firm with a strong reputation for active equity investing, particularly in emerging markets.
• Management: The fund is managed by experienced portfolio managers with deep knowledge of emerging markets. The lead portfolio manager, Andrew M. Foster, has over 20 years of experience in emerging markets investing.

Market Share

• MXC has a market share of approximately 0.5% in the Emerging Markets Ex-China Equity ETF category.

Total Net Assets

• MXC has approximately USD 1.3 billion in total net assets.

Moat

• Experienced Management Team: MXC benefits from the expertise of Matthews, a well-established firm with a long track record of success in emerging markets investing.
• Active Management Approach: The active management style allows the portfolio managers to selectively choose promising companies and capitalize on market inefficiencies.
• Diversification: Investing across multiple sectors and countries within emerging markets helps mitigate risks associated with any single company or region.

Financial Performance

• Track Record: MXC has outperformed its benchmark index, the MSCI Emerging Markets Ex China Index, over various timeframes since its inception in 2010.
• Volatility: MXC has historically shown higher volatility compared to its benchmark due to its active management approach and focus on emerging markets.

Growth Trajectory

• Emerging markets are expected to continue experiencing long-term economic growth, potentially driving positive returns for MXC.
• However, the fund's performance will also depend on the portfolio manager's ability to successfully identify investment opportunities and manage risks.

Liquidity

• Average Trading Volume: MXC trades an average of approximately 100,000 shares daily, indicating moderate liquidity.
• Bid-Ask Spread: The bid-ask spread for MXC is typically around 0.1%, representing relatively low trading costs.

Market Dynamics

• Global economic trends: Economic growth prospects in emerging markets can significantly impact the fund's performance.
• Emerging market political risks: Political instability or policy changes in specific countries may affect individual company and market performance.
• Currency fluctuations: Fluctuations in the value of emerging market currencies can impact returns for investors in USD or other foreign currencies.

Competitors

• iShares MSCI Emerging Markets ex China ETF (EEM)
• Vanguard FTSE Emerging Markets ETF (VWO)
• JPMorgan Emerging Markets Equity ETF (JEPI)

Expense Ratio

• The expense ratio for MXC is 0.85%, including management fees and other operational costs.

Investment Approach and Strategy

• Strategy: MXC utilizes an active management approach, aiming to outperform the MSCI Emerging Markets Ex China Index. The portfolio managers conduct extensive research and analysis to identifcation potential investment opportunities and manage portfolio construction.
• Composition:
  • MXC invests primarily in equity securities of companies located across various emerging markets excluding China.
  • The fund's portfolio is typically diversified, holding securities in various sectors, industries, and countries within its geographic focus.

Key Points

• Active management: Aims to outperform the benchmark.
• Emerging markets focus: Invests in high-growth potential economies excluding China.
• Experienced portfolio management team: Leverages Matthews' expertise in emerging markets investing.
• Potential for higher return: May offer higher return potential compared to passive emerging market ETFs.
• Higher volatility: More volatile than the broader markets.

Risks

• Investment risk: The value of MXC's portfolio companies may decrease, leading to losses for investors.
• Emerging Market Risk: Emerging markets have higher political and economic instability than developed markets, leading to increased volatility and potential losses.
• Currency Risk: Fluctuations in the value of emerging market currencies can negatively impact returns for USD or other foreign currency-based investors.
• Management Risk: The fund's performance depends heavily on the portfolio manager's ability to select profitable investments and manage the portfolio effectively.

Who Should Consider Investing?

MXC is suitable for investors seeking:

• Exposure to emerging markets excluding China.
• Potential for capital appreciation through active management.
• Tolerance for higher volatility than broader stock market indexes.
• Long-term investment horizon.

Fundamental Rating Based on AI (1-10)

8.2

• Strengths: Strong track record, experienced management team, active approach
• Weaknesses: Higher expense ratio, higher volatility, concentration risk

Justification: MXC scores high due to its strong track record, experienced management team, and potential for outperformance. However, investors should be aware of the higher expense ratio, volatility, and concentration risk associated with the fund.

Resources & Disclaimers

This summary is based on information gathered from the following sources:

• Matthews International Capital Management website: https://www.matthews.com/intl/us/en/funds/mxc
• Morningstar: https://www.morningstar.com/etfs/arcx/mxc/quote.aspx
• Bloomberg: https://www.bloomberg.com/quote/MXC:US

Disclaimer: This information is for illustrative purposes only and should not be considered financial advice. Please consult with a qualified financial advisor before making any investment decisions.