SPDR S&P Emerging Asia Pacific ETF GMF has some advantages, but its portfolio ultimately comes up short. It misses out on a decent portion of the opportunity set available to actively managed funds in the Pacific/Asia ex-Japan stock Morningstar Category.

This exchange-traded fund tracks the S&P Emerging Asia Pacific Broad Market Index—a market-cap-weighted index of large-, mid-, and small-cap stocks from seven emerging markets in the Asia-Pacific region. It excludes major developed markets like Hong Kong, Australia, and Singapore. Along the same lines, S&P assigns developed-markets status to South Korea, so its stocks don't make the cut. The index weights eligible constituents by their float-adjusted market capitalization, meaning it incorporates the market's opinion of each stock’s relative value while reining in trading costs.

Focusing on emerging markets leads to some lopsided country allocations. While it has exposure to stocks from seven countries, those from China, Taiwan, and India represented almost 90% of this portfolio at the end of December 2023. A typical peer had a smaller 55% stake in the same markets, with the difference parked in companies from developed markets. Stocks listed in Australia, South Korea, Hong Kong, and Singapore accounted for roughly 35% of the category average.

Aside from the large country biases, the portfolio looks a lot like the category average, and it has some mild advantages. Sector weights have tended to hew close to those of a typical peer with a modestly smaller stake in stocks from the financial sector. It diversifies away stock-specific risk better than most in the category, with only 22% of its assets dedicated to its 10 largest holdings.

So far, the fund has performed well against the category average but not in a consistent and repeatable way. It outperformed the average of its peers by 1 percentage point annualized from its launch in March 2007 through December 2023. Most of that advantage occurred over two short stints. The first came in early 2008, and the second occurred between mid-2014 and mid-2015. Differences in country exposures between the fund and its category peers explained almost all of its outperformance.

Analyst Rating

A niche ETF in a niche category.

Senior Analyst

Daniel Sotiroff

JPMorgan BetaBuilders Canada ETF

Yum China Hlds

MakeMyTrip

Premier Financial

SM Energy

TE Connectivity

Aduro BioTech

iStar

Bridgepoint Education

JPM China Reg Shs Ex 1st and Final Liquidating distribution

Large country biases undermine an otherwise good approach. The fund doesn't take advantage of the full opportunity set available to its actively managed category peers, and three markets dominate its portfolio. It earns an Average Process Pillar rating.

Average

Process

SSGA's global footprint, trading, and risk management processes enable low transaction costs and tight index tracking, supporting an Above Average People Pillar rating.

Karl Schneider and Teddy Wong oversee this fund. Schneider helps lead the global equity beta solutions group and has been a named manager on this fund since January 2015. He joined SSGA in 1997. The group was previously helmed by Michael Feehily, longtime portfolio manager and leader at the firm. His departure in March 2023 comes after more than 30 years with the firm. Teddy Wong, a manager since 2017, has been at SSGA since 2001.

The managers try to mitigate tracking error, transaction costs, and the tax consequences of their trades. A team of analysts helps the managers effectively track the index by anticipating index changes and corporate actions. The management team's compensation is tied to index-tracking performance, operational efficiency, and contribution to process improvement, which aligns their interests with investors'. The team is subject to independent risk oversight.

Above Average

People

State Street Global Advisors is under new leadership but continues to move along the positive trajectory established by former leaders. SSGA maintains its Above Average Parent Pillar rating.
Cyrus Taraporevala, who oversaw much of SSGA’s recent transformation, retired from the CEO position in December 2022 and passed the baton to his successor, Yie-Hsin Hung. She inherited a business that’s become more disciplined with its fund lineup. Fees have come down, while product development remains focused on fixed-income and sustainability funds, and many of SSGA’s launches have echoed that intention.
The seeds that SSGA planted over the past several years have been bearing fruit. It built out a low-cost series of portfolio building-block ETFs in the U.S. bearing the “SPDR Portfolio” branding. SSGA launched these later than its industry rivals, so they aren’t as large. But they’re competitive, with solid management and low fees, which helped them consistently take in new money over the past several years.
SSGA continued to overhaul its ETF business in Europe with most of its recent fixed-income and sustainability fund launches. Many of these funds track indexes and charge relatively low fees. With operations in the U.S. and Europe standing on a firm foundation, SSGA will put more focus on its Asia-Pacific business—the smallest regional segment of its business.

Parent

SPDR S&P Emerging Asia Pacific ETF

GMF tracks a market-cap-weighted index of emerging markets firms.

iShares MSCI All Country Asia ex Japan ETF

SmartETFs Asia Pacific Dividend Builder ETF

iShares Asia 50 ETF

Global X FTSE Southeast Asia ETF

JPMorgan BetaBuilders Developed Asia EX-Japan ETF

JPMorgan BetaBuilders Japan ETF

Xtrackers MSCI Japan Hedged Equity ETF

WisdomTree Japan SmallCap Dividend Fund

iShares Asia/Pacific Dividend ETF

WisdomTree Japan Hedged Equity Fund

WisdomTree Japan Hedged SmallCap Equity Fund

iShares MSCI Emerging Markets Asia ETF

iShares MSCI Philippines ETF

iShares MSCI Pacific ex-Japan ETF

iShares MSCI Australia ETF

iShares MSCI Japan ETF

iShares MSCI Japan Value ETF

iShares MSCI Malaysia ETF

iShares MSCI Singapore ETF

iShares MSCI Taiwan ETF

iShares MSCI South Korea ETF

First Trust Japan AlphaDEX Fund

Franklin FTSE Australia ETF

Franklin FTSE Asia ex Japan ETF

Franklin FTSE Japan Hedged ETF

Franklin FTSE Japan ETF

Franklin FTSE South Korea ETF

Franklin FTSE Taiwan ETF

First Trust Asia Pacific ex-Japan AlphaDEX Fund

Goldman Sachs ActiveBeta Japan Equity ETF

Xtrackers International Real Estate ETF

iShares Currency Hedged MSCI Japan ETF

iShares Core MSCI Pacific ETF

iShares JPX-Nikkei 400 ETF

Direxion MSCI Daily South Korea Bull 3X Shares

iShares MSCI Japan Small-Cap ETF

iShares MSCI Thailand ETF

Global X MSCI Vietnam ETF

VanEck Vectors Vietnam ETF

Vanguard FTSE Pacific ETF

While the China macro story of ongoing transition is a headwind to the rest of Asia, there is more to the region's economic health than this.

Asia-Pacific Is Not Just China

iShares MSCI Indonesia ETF

VanEck Vectors Indonesia Index ETF

The total nominal GDP of the ten ASEAN nations measured in US dollar terms amounted to USD 3.6 trillion in 2022, more than doubling compared with total GDP of USD 1.6 trillion in 2009. Singapore's GDP growth rate improved to a pace of 2.8% y/y in the fourth quarter of 2023 according to the advance estimate of GDP from the Ministry of Trade and Industry (MTI).

ASEAN Economic Outlook In 2024

With moderating inflation levels in most Asian countries and great growth potential in the medium to long term, investing in Emerging Asian countries can prove beneficial.

Invest in Emerging Asia in 2024 With These ETFs

The region is likely to see faster disinflation, but prospects for growth in coming years are dimming. Strong consumer spending has supported growth in Asia's three largest economies this year, but there are already signs that the region's recovery may be running out of steam.

Asia Continues To Fuel Global Growth, But Economic Momentum Is Slowing

iShares Edge MSCI Min Vol Emerging Markets ETF

iShares China Large-Cap ETF

iShares India 50 ETF

The Asia-Pacific region is set for growth, expanding as much as 4.6% this year according to the IMF's latest projections. China and India being the major driving factors for the growth of the region, take a look into ETFs which can help diversify your portfolio.

ETFs in Focus as IMF Raises Economic Outlook for Asia

Asian emerging countries offer more growth potential than the US economy. One of the main growth drivers of emerging Asia is the rise of the middle class: more and more consumers will be capable of contributing to the economic development of the region.

GMF And EEMA: Risk And Opportunity In Emerging Asian Markets

CSOP FTSE China A50 ETF

Xtrackers Harvest CSI 300 China A-Shares ETF

Xtrackers Harvest CSI 500 China A-Shares Small Cap ETF

Xtrackers MSCI China A Inclusion Equity ETF

VanEck China Bond ETF

Global X China Biotech Innovation ETF

Global X MSCI China Communication Services ETF

Global X China Energy ETF

Global X MSCI China Health Care ETF

Global X China Industrials

Global X MSCI China Information Technology ETF

Global X MSCI China Large Cap 50 ETF

Global X China Materials ETF

Global X China Consumer ETF

Global X MSCI China Real Estate ETF

Global X MSCI China Consumer Staples ETF

Global X MSCI China Utilities ETF

Global X China Financials ETF

Loncar China Biopharma ETF

Xtrackers MSCI All China Equity ETF

VanEck Vectors ChinaAMC SME-ChiNext ETF

iShares MSCI China A ETF

Invesco China Technology ETF

Asian Growth CUBS ETF

WisdomTree China ex-State-Owned Enterprises Fund

iShares MSCI China Small-Cap ETF

iShares MSCI Hong Kong ETF

First Trust China AlphaDEX Fund

Franklin FTSE China ETF

Franklin FTSE Hong Kong ETF

First Trust Chindia ETF

ProShares UltraShort FTSE China 50

SPDR S&P China ETF

KraneShares MSCI All China Index ETF

KraneShares Bosera MSCI China A Share ETF

KraneShares Bloomberg China Bond Inclusion Index ETF

KraneShares CICC China 5G & Semiconductor Index ETF

KraneShares CICC China Leaders 100 Index ETF

Kraneshares MSCI China Environment Index ETF

KraneShares SSE STAR Market 50 Index ETF

KraneShares Hang Seng Tech Index ETF

KraneShares MSCI All China Health Care Index ETF

KraneShares CSI China Internet ETF

iShares MSCI China ETF

Invesco Golden Dragon China ETF

Rayliant Quantamental China Equity ETF

Templeton Dragon Fund

ProShares Ultra FTSE China 50

Direxion Daily FTSE China Bear 3X Shares

Direxion Daily FTSE China Bull 3X Shares

ProShares Short FTSE China 50

Non-China Asian exports are still growing, but the pace of increase has slowed and will slow still further as key export destinations struggle with inflation, energy security, and rising recession risks. In year-on-year terms, the rate of overall export growth is now skirting single-digits again.

Asian Exports Are Softening

iShares MSCI Japan Equal Weighted ETF

iShs Crr Hg JPX Shs

A multifaced response, including increasing interest rates, is needed to prevent an upward spiral of price expectations and rising capital outflows. China, Asia's largest economy, saw a significant deceleration in the second quarter as the zero-COVID policy prompted lockdowns for major cities and supply-chain hubs.

Asia's Economies Face Weakening Growth, Rising Inflation Pressures

The ASEAN region has shown a strong rebound in manufacturing output during October. As a result of the severe negative impact of the COVID-19 pandemic and widespread lockdowns and travel bans, many ASEAN economies were in deep recession during 2020.

ASEAN Manufacturing Rebounds In October, RCEP Ratification Boosts Longer-Term Economic Outlook

Asia Pacific is booming. China was the only country with positive GDP growth last year. Taiwan's market is rocketing higher as its companies dominate high-end semiconductors. That being the case, U.S. investors looking to diversify into international markets should consider the SPDR S&P Emerging Asia Pacific ETF.

GMF: China And Taiwan Markets Are Booming

With the United States and China locked in an increasingly heated rivalry, the European Union needs to choose a side.

Short And Sharp: Investing In Emerging Asia Amid Rising Global Tensions

iShares Core MSCI Emerging Markets ETF

SPDR MSCI Emerging Markets StrategicFactors ETF

SPDR Portfolio Emerging Markets ETF

Vanguard FTSE Emerging Markets ETF

Cheaper valuation, easy money polices and moderate strength is the greenback should favour these EM ETFs ahead.

5 Emerging Market ETFs Beating S&P 500 Amid Virus Scare

News for SPDR S&P Emerging Asia Pacific ETF ETF (GMF)