ETF Launches
Strategy and Portfolio Construction
ACEM targets long-term capital growth by investing at least 80% of net assets in companies located in emerging market countries, benchmarked against the MSCI EM (Emerging Markets) IMI. The fund’s universe spans roughly two dozen countries, including China, India, Brazil, Taiwan, South Korea, and Saudi Arabia, with the flexibility to allocate to frontier markets as well. Rather than tracking an index, the portfolio managers — Patricia Ribeiro, Sherwin Soo, and Stephen Quance — build positions from the bottom up, focusing on companies where earnings, revenues, or key business fundamentals are expected not just to grow, but to accelerate. Systematic risk controls and portfolio construction techniques are layered on top of this fundamental research to improve efficiency and liquidity management. The fund discloses holdings daily and may concentrate significantly in a single country or sector when the managers see fit.
How It Compares
ACEM competes with other active emerging markets ETFs such as JEMA, DFAE, EMOP, DFEM, and AVEM. At 0.59%, its expense ratio is broadly in line with actively managed peers, though meaningfully above passive emerging market index funds. The growth-oriented, acceleration-focused stock selection distinguishes it from factor-based or value-tilted active alternatives in the space.
Key Risks to Understand
Emerging markets carry a distinct set of risks that investors should weigh carefully. Political instability, currency fluctuations, lower liquidity, and weaker regulatory frameworks can all affect returns. China exposure introduces additional concerns around variable interest entity (VIE) structures, where investors hold contractual rights rather than direct equity ownership, and where U.S. regulators have limited audit oversight. Frontier market allocations amplify these risks further. As an active strategy, the fund may also underperform its benchmark or passive alternatives. The fund’s small current AUM raises some liquidity and large-shareholder concentration considerations, as a single large redemption could have an outsized market impact.
ACEM may appeal to investors seeking active, growth-oriented exposure across the emerging market universe who are comfortable with the additional costs and risks that come with that approach. The fund’s use of systematic portfolio construction alongside fundamental analysis reflects an attempt to balance conviction-driven stock selection with disciplined risk management — a combination that will ultimately be tested by live market conditions over time.
