EMXC: The Case For Emerging Markets Without China

Michael A. Gayed, CFAInvesting Group LeaderFollow5ShareSavePlay(8min)CommentsSummaryEMXC removes China's 25% drag from EM exposure, capturing semiconductor and financial strength across Taiwan, South Korea, and India instead.Five-year annualized outperformance of 471 basis points over EEM, with a Sharpe ratio of 0.50 vs. EEM's 0.20, makes the ex-China thesis quantifiable.Key risks include Taiwan Strait concentration (TSMC at 17.79%), India-Pakistan tensions, and fee competition from Vanguard's VEXC at 0.07%.This idea was discussed in more depth with members of my private investing community, The Lead-Lag Report. Learn More » Jinda Noipho/iStock via Getty Images The tariff war didn't create the ex-China EM thesis. It just made it impossible to ignore. By the time Trump's reciprocal tariffs hit 125% on Chinese goods in mid-2025 and the new SectionThis article was written byMichael A. Gayed, CFA30.64K FollowersFollowMichael A. Gayed is portfolio manager, and author of five award-winning research papers on market anomalies and investing. He has a BS with a double major in Finance & Management from NYU Stern School of Business, and is a CFA Charterholder. Michael runs the investing group The Lead-Lag Report, focused on helping investors outperform in all market conditions. It offers a tactical, data-driven approach to investing, to achieve long-term success even in the face of uncertainty. With increasing market volatility, it's essential to understand risk-on/risk-off signals, seize high-yield opportunities, and leverage award-winning research to maximize returns. Learn More.Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. The Lead-Lag Report is provided by Lead-Lag Publishing, LLC. All opinions and views mentioned in this report constitute our judgments as of the date of writing and are subject to change at any time. The information provided herein is not intended to be used as the primary basis of investment decisions. Investors should consult their financial advisers prior to any investment decision.Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.