GMO Beyond China ETF (BCHI)
Why does this fund exist now?
For decades, China has been the factory of the world — the place where companies located production to keep costs low. That is changing, slowly but persistently. Governments and corporations are nervous about the concentration risk of having everything made in one country, especially as geopolitical tensions around Taiwan and trade policy create uncertainty. They are shifting production to Vietnam, Thailand, India, Mexico, and other emerging markets. GMO Beyond China ETF was launched in 2025 to capture a simple idea: there is money to be made from the companies and markets that benefit when supply chains relocate out of China.
What does the fund actually invest in?
BCHI is an actively managed emerging-market equity fund that invests in companies tied economically to markets that are not treated as developed markets in the MSCI World Index — so emerging markets broadly, but excluding China. The fund holds roughly 113 securities as of its most recent fiscal year. The top ten holdings made up about thirty-nine percent of assets, indicating that the portfolio is reasonably concentrated around the manager’s highest-conviction picks.
As for geography, nearly ninety-nine percent of the portfolio is invested in foreign issues, spread across Asia, Latin America, and other emerging regions that stand to benefit from manufacturing relocation and supply chain diversification. The manager seeks companies positioned to benefit both from growth within emerging markets themselves and from the specific trend of deglobalization and supply-chain reorientation.
What kinds of companies are in this fund?
Because the fund is themed around supply-chain shifts, it naturally holds manufacturers and suppliers who will win new business as companies move production out of China, as well as companies that service those new manufacturing hubs. It also holds broader emerging-market plays — companies riding the growth of India, Southeast Asia, and other regions. The strategy is not to own China itself (China is excluded) but to own the emerging markets that become the alternative.
How has the fund actually performed?
In its first fiscal year, ending June 30, 2025, GMO Beyond China ETF returned 9.03% net at net asset value. The MSCI Emerging Markets ex-China Index, the relevant benchmark, returned 13.04% over the same period. This is a young fund, and one year is not enough to assess an active manager’s skill — market conditions, luck, and timing all play a role in short-term performance. What matters is whether the manager can sustain an advantage over longer time horizons.
What does this fund cost?
The expense ratio is 0.65% annually. That is reasonable for an actively managed emerging-market fund, though higher than a passive index fund would charge. Investors are paying for the manager’s research and the active stock-picking process.
What are the real risks?
Emerging markets are volatile. Currency fluctuations, political change, trade disputes, and sudden shifts in government policy can cause sharp moves in any emerging-market fund. This fund has added thematic risk: the bet that supply chains will actually move away from China, and that the emerging markets chosen by the manager will be the primary beneficiaries. If that trend slows or reverses, the fund’s performance would suffer.
The portfolio is also somewhat concentrated in its top ten holdings, meaning that a mistake in a few large positions would be visible in the fund’s returns. Emerging-market economies can also be more vulnerable to global slowdowns than developed economies, so BCHI carries the cyclical risks that emerging markets always do.
Who should own this fund, and how should they research it?
This fund is for investors who believe that supply-chain diversification away from China is a real, enduring trend and that the emerging markets benefiting from that shift offer attractive long-term returns. It appeals to those with a longer time horizon — three to five years or more — and a tolerance for volatility. It is less suitable for someone seeking stable, diversified emerging-market exposure or for someone betting against the deglobalization thesis.
Start your research with GMO’s materials: the prospectus, the fact sheet, and any research pieces explaining the supply-chain opportunity. Look at the geographic breakdown: which countries does the manager favor, and why? Study the sector weightings — manufacturing and machinery will likely be overweighted. Compare rolling three-year and five-year returns to the MSCI Emerging Markets ex-China Index to see whether the active approach is paying off. Finally, stay alert to how the trade and geopolitical landscape evolves; a significant change in U.S. tariff policy or a thaw in U.S.-China relations could alter the fund’s outlook.
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