Columbia EM Core ex-China ETF (XCEM)

On our desk, we are seeing a massive structural rotation out of China-heavy EM allocations. With traditional indices like EEM weighed down by a 26.5% China concentration, funds like XCEM provide a clean tactical bypass around ongoing geopolitical friction and regulatory uncertainty in Beijing.

Watching the 50-day MA and tracking capital flows, it is clear that XCEM's 38% to 50% YTD surge isn't a fluke. The fund is capturing the exact upstream supply chain diversification and accelerating AI investments that investors are rotating toward across emerging economies.

Hedging with Q4 put spreads on ex-China ETFs requires keeping a close eye on the DXY and TSMC monthly revenue reports. As our analysis shows, XCEM's incredible run could reverse quickly if the US dollar firms up significantly or if hyperscaler capex begins to slow down.

From a portfolio construction standpoint, XCEM tracks the Beta Thematic Emerging Markets ex-China Index of up to 700 large- and mid-cap stocks. When assessing candidate models for our institutional clients, we emphasize that removing China fundamentally changes the risk-reward profile, mitigating localized governance risks while retaining high-beta exposure.

In our strategy sessions, the narrative is all about the 'Ex-China' playbook. State Street data points to $38 billion in net new assets flowing into EM ETFs in the first half of the year alone. Investors are actively demanding vehicles that satisfy portfolio needs to control concentration risk in the world's second-largest economy.