An Emerging Markets ETF That's Catalyst-Rich

Core Viewpoint - Emerging market equities have shown a significant resurgence in 2025, with the MSCI Emerging Markets Index outperforming the S&P 500 by nearly a 2-to-1 margin as of September 9 [1][2]. Performance Summary - The WisdomTree Emerging Markets ex-State-Owned Enterprises Fund (XSOE) has surged nearly 21% since the beginning of the year, indicating the effectiveness of investing in emerging market companies not controlled by national governments [3][4]. - The XSOE ETF, which has a market size of nearly $2 billion, has benefited from a favorable country mix, with approximately 34.60% of its holdings in China and South Korea stocks [4]. Country-Specific Drivers - In China, tariff de-escalation and government initiatives to boost consumption and investor confidence have positively influenced market sentiment [5]. - South Korea has gained from attractive valuations and its integral role in the AI and chip supply chain, while Taiwan, which constitutes 22.11% of the XSOE, has also benefited from similar trends, with the MSCI Taiwan Index up 19% this year [5][8]. Macroeconomic Factors - The weak dollar has been a significant support for emerging market stocks, with expectations that the Federal Reserve may lower interest rates due to cooling inflation as indicated by the Producer Price Index [6]. - A favorable macroeconomic outlook in countries like India, which makes up 21.328% of the XSOE, further supports the performance of emerging market assets [7].