Emerging market ex-China equity funds' assets hit record high
By Patturaja Murugaboopathy
July 17 (Reuters) - Net assets of emerging market (EM) equity funds that exclude China hit a record high in June, Morningstar data showed, as investors favored Latin America and Southeast Asia and took a more selective approach to the slowing Chinese economy.
According to the data, net assets of EM ex-China equity funds rose 15.2% in the first half of 2025 to a record high of $70.1 billion at the end of June.
The number of EM ex-China equity funds rose to 74 this year, four times as many as five years ago, the data showed.
Malcolm Dorson, senior portfolio manager at Global X ETFs, said investors were increasingly favouring EM ex-China strategies to get exposure to Southeast Asia and Latin America, while building separate China positions through sector-specific ETFs.
"Most investors are still hesitant around Chinese real estate and state-owned enterprises, and prefer a targeted and well-balanced approach."
According to LSEG Lipper data, global exchange-traded funds (ETFs) focused on emerging market equities attracted $18 billion in net inflows during the first half of 2025; ETFs with exclusive exposure to Chinese equities posted $14 billion in net outflows over the same period.
EM Europe has also seen investor interest pick up, backed by the economic turnaround in Germany and strong equity performance, particularly in the DAX index .GDAXI.
The Avantis Emerging Markets ex-China Equity ETF AVXC.O is up 15.1% year-to-date, while the abrdn Emerging Markets ex-China Fund has risen 14%. By comparison, the MSCI Asia-Pacific Index .MIAP00000PUS is up 11.6%, and China’s Shanghai Composite Index .SSEC has gained just 4.9%.
"The concentration risk, along with the broader underperformance of Chinese equities and heightened geopolitical risks, has prompted both asset managers and allocators to reconsider their approach," said Mathieu Caquineau, senior principal for equity strategies ratings at Morningstar.
However, investors seeking diversification and outperformance could not risk excluding China completely, he said.
EM ex-China net assets hit record high
Total number of EM ex-China funds
Flows into China and EM equity ETFs
Related Articles
What Is a 401(k), and What Does Trump’s Crypto Retirement Policy Really Mean?
A 401(k) is the most widely used retirement savings plan in the U.S., governed by Section 401(k) of the Internal Revenue Code. It allows employees to contribute a portion of their salary into a tax-advantaged account, typically invested in traditional assets like stocks and bonds.
U.S. July CPI Commentary: Obstacles Cleared, Where Will U.S. Stocks Go Next?
TradingKey - On 12 August 2025, the United States released its Consumer Price Index (CPI) data for July. In terms of headline inflation, the CPI rose by 2.7% year-on-year in the month, slightly lower than the expected 2.8%. However, core CPI climbed 3.1% year-on-year, edging past the projected 3.0%.
RTX: Driving Breakthroughs in Defense Technology and Commercial Aviation
RTX Corporation (NYSE: RTX) is a dominant force in aerospace and defense, perfectly positioned to ride the wave of growing global defense budgets and a booming commercial aviation market.
What Is Stellar (XLM), and Why Did It Surge Over 110% in Just 7 Days?
Stellar isn’t just another altcoin — it’s a blueprint for a next-generation financial system. From remittances and stablecoin settlement to smart contracts and CBDC infrastructure, Stellar is redefining what “on-chain capital markets” can look like.
[IN-DEPTH ANALYSIS] Observing Bitcoin Price Trends from a Macroeconomic Perspective
After a comprehensive analysis, we believe that three favourable factors will overshadow a single adverse factor, supporting a continued upward price trend for cryptocurrencies, with Bitcoin at the forefront.
