There's an ETF for That? Emerging Markets Without China

Vanguard Emerging Markets ex-China ETF

VEXC

VEXC is one of the newest entrants into the ex-China category, having launched in September 2025. Despite its relatively short history, the fund has already gathered roughly $235 million in assets. In classic Vanguard fashion, it also comes with a low 0.07% expense ratio.

Like most Vanguard funds, VEXC follows a passive approach. Specifically, it tracks the FTSE Emerging ex China Index, which removes Chinese companies entirely from the emerging markets universe and redistributes those weights among the remaining countries.

The result is a country allocation that looks very different from a traditional emerging markets fund. Taiwan becomes the largest country exposure at roughly 45% of assets, followed by India at 21.3%. Brazil accounts for 6.1% of the portfolio, while South Africa contributes another 5.4%.

One detail worth noting is the absence of South Korea. While many investors associate Korea with emerging markets, FTSE classifies the country as a developed market. As a result, Korean companies are excluded from VEXC's index. Investors seeking emerging market exposure that includes Korea typically need to look at funds tracking MSCI benchmarks instead.

Removing China also creates some notable differences beneath the surface. Country weights ultimately drive sector weights, and China has historically contributed large allocations to sectors such as consumer discretionary and communication services.

Using ETF Central's comparison tool to compare VEXC against the much larger and more established Vanguard FTSE Emerging Markets ETF

, one of the most noticeable changes is a larger allocation to technology stocks. This is largely a consequence of Taiwan's increased weighting, given the country's central role in global semiconductor manufacturing and electronics supply chains.

The portfolio is also somewhat more concentrated. The top 15 holdings account for 36.2% of assets compared to 28.3% for VWO. That concentration is not necessarily a negative, but it does mean investors are placing a larger share of their emerging market exposure in a relatively small group of companies, many of which are tied to Taiwan's technology sector.

For investors seeking a simple, low-cost way to access emerging markets while avoiding China, I think VEXC is about as straightforward and affordable as it gets. The tradeoff is that removing the world's second-largest economy inevitably increases exposure elsewhere, particularly to Taiwan and India. For many investors, that is precisely the point.

Sprott Rare Earths ex-China ETF

REXC

-2.03%

While VEXC offers broad emerging market exposure without China, REXC takes a much more targeted approach. Rather than excluding Chinese equities from an entire asset class, it focuses on one specific industry where China's influence is particularly difficult to ignore: rare earth minerals.

Despite the name, rare earths are not necessarily rare. Rather, they are a group of 17 metallic elements that are often difficult and expensive to extract, refine, and process. Examples include neodymium, praseodymium, dysprosium, terbium, and lanthanum. These materials play a critical role in modern technology, finding their way into everything from smartphones and data centres to electric vehicles, wind turbines, radar systems, and advanced military equipment.

The challenge for investors is that China occupies an extraordinarily dominant position in the global rare earth supply chain. Even when minerals are mined elsewhere, refining and processing frequently occurs in China. As a result, investors seeking exposure to the theme often end up with significant allocations to Chinese companies.

For some investors, that creates a two-pronged risk. The first is supply chain disruption. The second is geopolitics. Rare earths have become increasingly important to economic competitiveness and national security, leading governments around the world, particularly the United States, to prioritize domestic production and alternative supply chains.

That backdrop helps explain the existence of REXC. The fund currently manages roughly $56 million in assets and carries a 0.65% net expense ratio. It tracks the Nasdaq Sprott Rare Earth ex China Index, which specifically targets companies involved in rare earth mining, development, processing, and related activities while excluding Chinese firms.

Sprott's investment thesis centers on China's dominance of the sector and the possibility that export controls or trade restrictions could affect global supply chains. At the same time, demand for rare earth materials continues to grow as investment pours into artificial intelligence infrastructure, data centres, robotics, electrification, and other advanced technologies.

The resulting portfolio is relatively concentrated. REXC holds just 34 companies with a weighted average market capitalization of approximately $6 billion, placing the fund squarely in mid-cap territory. Nearly 45% of holdings fall into the small-cap category with market values below $2 billion.

Compared with the larger and more established VanEck Rare Earth/Strategic Metals ETF

, the impact of excluding China becomes immediately apparent. Australia accounts for roughly 48% of the portfolio while the United States represents 40.3%. Canada contributes another 8.2%.

Australia's large weighting is not surprising. The country possesses some of the world's largest rare earth reserves and has spent years positioning itself as a key alternative supplier to China. Companies operating in Australia have become increasingly important to Western governments seeking to diversify critical mineral supply chains. The United States has pursued similar goals through investments in domestic mining, processing capacity, and strategic resource development.

As a result, REXC arguably offers a more concentrated expression of the rare earth diversification theme than broader strategic metals funds. Investors are not simply betting on rising demand for rare earth materials. They are also expressing a view that supply chains may increasingly shift toward producers located in countries viewed as geopolitical allies of the United States.

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision