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When investing in emerging markets, Matthews Asia's head of portfolio strategy David Dali said at Exchange 2023 that active management is key. “Our benchmarks tend to be blind to things like corporate governance and regulatory issues and geopolitics,” Dali told NYSE's Judy Shaw.
While a global downdraft has affected nearly all segments of the market, emerging markets have been particularly impacted by a strong U.S. dollar. Thus, emerging markets rallied in mid-December as the U.S. dollar weakened against other major currencies amid growing concerns of the U.S.
Active emerging markets ETFs showed their strength this year, tactically adding new exposure to counter challenges in volatile markets and outperforming passive benchmarks.
Investors looking to access quality emerging markets exposure may want to consider the Matthews Emerging Markets Equity Active ETF (MEM).
As advisors look at options for tax-loss harvesting EM losses, ditching passive funds in favor of active ETFs may be worth consideration. With the end of the year approaching quickly, tax-loss harvesting is becoming a large focus among advisors and clients.
The outlook for emerging markets is bright, particularly for longer-term investors able to capitalize on the current discounted valuations. Investors with an intermediate- to longer-term perspective will benefit from allocating to a China-focused, Asia, or broad emerging markets ETF while these funds are still trading at a discount.
Innovation should be a core growth theme within an investor's allocation to emerging markets. The Matthews Asia Innovators Active ETF (MINV) is a high-conviction and concentrated equity portfolio, investing in innovative companies in Asia ex-Japan, capitalizing on the new economy and rising disposable income in the region.
Many advisors avoid allocating to emerging markets over concerns the asset class will bring significant risk to a portfolio; however, this is a common misconception. Looking at the risk profile of emerging markets from an academic perspective, they are still volatile – albeit less than the asset class used to be.
SEC filings for MINV aren't indexed yet — common for recently launched funds. Browse the issuer's filings on SEC EDGAR directly.