Matthews Emerging Markets ex China Active ETF (MEMX)

MEMX is an actively managed ETF that provides exposure to the stocks of publicly traded companies in emerging economies, with an explicit exclusion of China. Matthews International Capital Management, the portfolio managers, select stocks they believe offer the best growth and valuation opportunities among the emerging markets that remain — India, Indonesia, Vietnam, Thailand, the Philippines, Brazil, Mexico, Colombia, India, Poland, and other developing nations.

The rationale for excluding China is that some investors believe China’s economy and capital markets carry distinct political, regulatory, and geopolitical risks that warrant separate consideration. By removing China from the opportunity set, MEMX targets emerging markets as a theme while allowing investors who wish to avoid China exposure to do so without holding a purely passive China-free index fund.

Because MEMX is actively managed, the portfolio managers make stock-picking decisions based on their research. India, as the world’s most populous developing economy and a long-time focus of Matthews’ research, is typically heavily represented. Southeast Asia and other emerging markets beyond China receive significant allocations. The mix changes as the team’s views evolve.

The expense ratio of an actively managed fund is higher than that of a passive emerging-markets ex-China index fund. The fund is intended for investors with a medium- to long-term horizon who believe that active stock selection in this universe can generate returns above its fee through disciplined research and selective positioning.

Risks include the concentration in emerging markets, which are subject to currency risk, political instability, and sudden changes in government investment policy. Individual countries within the emerging-markets universe can experience significant shocks — from India’s monetary policy decisions to Latin American political shifts. Holdings in MEMX are typically less liquid than U.S. stocks, so the fund must manage trading carefully to avoid large bid-ask spreads when positions need adjustment.

The deliberate exclusion of China simplifies the geopolitical picture for some investors but also limits diversification. Investors should understand whether their own views on China align with this fund’s positioning; a passive emerging-markets index that includes China would provide different risk and return characteristics.

To research MEMX, review the current holdings and country allocations on Matthews’ website. Compare the fund’s expense ratio to competing emerging-markets ex-China funds. Examine the portfolio managers’ recent commentary on their emerging-market outlook and any changes in positioning. Look at the fund’s historical performance relative to an emerging-markets ex-China index to assess whether active management has added value. Review the prospectus for the full investment strategy and risk disclosures. Monitor emerging-market developments, particularly in India and other major holdings, to understand how policy shifts might affect the portfolio.