FRANKLIN FTSE EMERGING X CHINA UCITS ETF

Issuer: Franklin Templeton

Asset Class: Equity

TER: 19bps

Trading Currency: GBP

Pays Income: False

Listing Date: 24 Oct 2024

Ticker: EEXC

ISIN: IE0006D3PGW3

This fund offers targeted exposure to emerging market equities while specifically excluding China, aiming to replicate the performance of the FTSE Emerging ex China Index. This strategy is designed for investors who believe in the growth potential of developing economies but wish to manage their exposure to China separately, potentially due to geopolitical risks, regulatory concerns, or the sheer size of the Chinese market which can dominate standard emerging market indices. By removing China, the portfolio's country and sector allocations are significantly re-weighted, offering a different risk-reward profile compared to traditional emerging market investments and providing a more diversified source of returns from the developing world.

The underlying index comprises large and mid-cap stocks from over 20 emerging countries, providing broad diversification across various economies such as India, Taiwan, Brazil, and South Korea. Investors gain access to a diverse range of sectors, including technology, financials, and materials, reflecting the varied economic drivers of these nations. This approach allows for more granular control over portfolio construction, enabling investors to either underweight China or to pair this fund with a separate China-specific investment to achieve a desired allocation. The fund employs a physical replication methodology, meaning it directly holds the actual securities of the index, which can enhance transparency for investors.

This investment vehicle is suitable for those seeking long-term capital growth who are willing to accept the higher volatility associated with emerging markets. It can serve as a core building block for an international equity portfolio or as a tactical tool to express a specific view on the trajectory of emerging economies independent of China's influence. Its cost-effective structure makes it an accessible option for capturing the dynamic growth opportunities present in a broad array of developing nations, spanning from Latin America to Southeast Asia and Eastern Europe, without the concentrated risk of a single large economy.