Stealth EM bull boosts iShares ETF

New ex-China fund racks up 46% gain year to date

You may not have noticed but emerging markets ETFs have done very well this year. In fact, they have delivered a breakout year, outperforming the more familiar North American indexes by a wide margin.

There are several reasons for this, including:

A weak U.S. dollar. This makes U.S. products easier to buy in overseas markets. A weakening U.S. dollar also tends to boost capital flows and currency stability in emerging regions.

Chinese economic stabilization. A massive rebound in Chinese equities, fueled by aggressive central government stimulus and a stabilization of both consumer and technology sectors, served as a primary engine for the improved emerging markets performance.

Attractive valuations. Following over a decade of underperformance compared to U.S. markets, emerging market equities traded at deep discounts. This provided room for significant valuation catch-up.

Investors have been so focused on tech stocks and AI that they haven’t paid much attention to emerging markets. The big gains may have already been made, but I still see some upside in this sector. Here’s one idea.

New iShares EM fund posts impressive gains

iShares MSCI Emerging Markets ex China Index ETF (TSX: XEMC) invests in a range of emerging market countries, except China. It tracks the performance of the MSCI Emerging Markets ex China Index, net of expenses. The fund gained almost 72% in the year to June 30. It’s ahead over 46% so far in 2026.

This is a new fund, launched in February 2023, so we don’t have much history to work with. The limited amount we do have is impressive. The fund gained 11.6% in 2024 and 28.1% in 2025. Year-to-date, it is ahead 46%.

Assets under management (AUM) total $138 million, and the MER is a reasonable 0.31%.

Emerging markets have a long history of volatility. That means this fund is likely to make people nervous when valuations change dramatically. If that describes your temperament, this fund is not for you.

The fund makes payments twice a year, in June and December. They can vary greatly: The recent June payment was worth about $0.40 a unit, while the one in December was almost $0.99 per unit.

The fund is the Canadian proxy for the U.S.-based ETF of the same name, which trades as EMXC on Nasdaq. Its largest positions are in companies like Taiwan Semiconductors (18.9%), Samsung (8.75%), and SK Hynix (7.84%). No other company represents more than 2% of the assets.

This fund is useful for those who want to add an emerging markets position to their portfolio and are willing to accept the low cash flow and volatility that accompany this fund.

It is a hot fund today. The story may be different tomorrow. Keep that in mind when deciding. Before investing, consult with your financial advisor to ensure the fund aligns with your financial objectives and your risk-tolerance level.

Gordon Pape is one of Canada’s best-known personal finance commentators and investment experts. He is the publisher of The Internet Wealth Builder and The Income Investor newsletters, which are available through the Building Wealth website.

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Notes and Disclaimer

Content © 2026 by Gordon Pape Enterprises. All rights reserved. Reprinted with permission. The foregoing is for general information purposes only and is the opinion of the writer. Securities mentioned carry risk of loss, and no guarantee of performance is made or implied. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting, or tax advice. Always seek advice from your own financial advisor before making investment decisions.

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