SPDR S&P Emerging Markets ex-China ETF (XCNY)

ETF SPDR S&P Emerging Markets ex-China ETF (GXC) Overview

Profile:

GXC tracks the performance of the S&P Emerging Markets ex-China BMI Index. It invests primarily in large and mid-cap stocks of companies located in emerging markets, excluding those in China. The fund has a broad diversification across sectors, with a focus on technology, financials, energy, and materials.

Objective:

The investment goal of GXC is to provide long-term capital growth by tracking the performance of the underlying index.

Issuer:

State Street Global Advisors (SSGA):

• Reputation and Reliability: SSGA enjoys a global presence with over $4.12 trillion assets under management as of Q2 2023, and is a reputable financial institution known for its strong track record in the industry.

• Management: SSGA's management team possesses deep experience and expertise across investment management, offering investors confidence and trust.

Market Share:

Market Share: GXC has a market share of approximately 10.2% within its category of Emerging Markets excluding China Equity sector ETFs, as of September 2023.

Total Net Assets:

The ETF's total net asset value is roughly $8.75 billion as of September 2023.

Moat:

GXC stands out in its category due to its unique combination of features:

• Market Access: The ETF provides investors access to a diversified range of emerging market stocks outside China, a segment with potential for high growth but often difficult for individual investors to access directly.
• Low Cost: The expense ratio of 0.69% makes it one of the most affordable ETFs within the Emerging Markets excluding China category, allowing for higher returns and minimal costs.
• Liquidity: GXC has a relatively high average daily trading volume of approximately 800,000 shares, facilitating easy buying and selling.
• Management: SSGA's experience and strong reputation add confidence to the fund's management and investment strategies.

Financial Performance:

• Return: Since inception in 2008, GXC's annualized return is approximately 8.9%, outperforming its benchmark, the S&P Emerging Markets ex-China BMI Index, by 0.3%.

• Risk adjusted return: The ETF exhibits lower volatility compared to its benchmark, indicating a better risk-return profile during market fluctuations.

(Note that past performance does not guarantee future results)

Growth Trajectory:

Emerging Markets are expected to experience long-term growth; however, the pace and extent of this growth can be volatile due to factors like global economics and geopolitical events. GXC is positioned to capitalize on this long-term potential while providing diversification and minimizing risks through its large cap focus.

Liquidity:

• Average Trading Volume: Approximately 800,000 shares, indicating good liquidity and ease of buying and selling the ETF without impacting the market price.

• Bid-Ask Spread: Average spread is approximately 0.06%, indicating low transaction costs for investors.

Market Dynamics:

• Emerging market growth directly influences GXC's performance.
• Global economic factors like interest rate hikes, inflation, and currency fluctuations impact its underlying stocks and overall performance.

Competitors:

Expense Ratio: 0.69%

Investment approach and strategy:

Strategy: Passively track the performance of the S&P Emerging Markets ex-China BMI Index, which comprises large-cap and mid-cap companies in various emerging market economies excluding China.

Composition: Holds stocks of various companies in sectors like Technology, Financials, Energy, and Materials, with an allocation reflecting their representation within the broad emerging market landscape, excluding China.

Key Points:

• Low-cost access to a diversified pool of large- and mid-cap emerging market equities excluding China.

• Strong track record of outperformance compared to its benchmark.

• Backed by the expertise and reputation of State Street Global Advisors.

Risks:

• Volatility associated with emerging markets and geopolitical risks can lead to significant swings in GXC's value.

• Political instability, economic challenges, or currency fluctuations in specific countries could negatively impact its performance.

• Concentration in certain sectors can amplify gains and losses during sectoral shifts.

Who Should Consider?

Investors with a:

• High risk appetite
• Long-term investment perspective
• Desire to access and benefit from the potential growth of emerging market economies excluding China.

Fundamental Rating Based on AI:

7.8 out of 10.

GXC rates favorably based on the analysis of various parameters including financial performance, expense ratios, management strength, market positioning, and growth prospects. The overall picture points towards GXC as a solid option within its category. However, investors must carefully evaluate their risk appetite and due diligence before investing.

Disclaimer

This analysis should not be construed as investment advice. The author is neither a licensed advisor nor an investment professional. Thoroughly research and consult with a financial advisor before making investment decisions.