Core Viewpoint - The Avantis Emerging Markets Equity ETF (AVEM) achieved a 35% return in 2025, significantly outperforming major Vanguard funds, indicating a potential resurgence for emerging markets [1][2]. Group 1: Performance and Assets - AVEM holds $15.1 billion in assets and has a concentrated investment in Asian technology and financial sectors, particularly with 6.35% allocated to Taiwan Semiconductor [1][2]. - The fund outperformed the Vanguard S&P 500 ETF (VOO) and Vanguard Total Stock Market ETF (VTI) by approximately 17 percentage points in 2025 [1][2]. Group 2: Macro Factors - A key macroeconomic factor for AVEM in 2026 is the strength of the U.S. dollar; a 9% decline in the dollar during 2025 enhanced the attractiveness of emerging market assets [4]. - Continued dollar weakness is expected to provide tailwinds for AVEM, while monitoring the Federal Reserve's rate decisions and global growth expectations is crucial [5]. Group 3: China’s Economic Influence - AVEM's performance is heavily influenced by China's economic policies, with significant investments in Chinese tech giants and banks; supportive government measures in 2025 contributed to the fund's gains [6]. - If China's support for the private sector continues or accelerates in 2026, AVEM stands to benefit, but tightening policies or geopolitical tensions could pose risks [6]. Group 4: Sector Concentration and Risks - The fund's largest holding is Taiwan Semiconductor, and its returns are significantly driven by semiconductor stocks, which performed well due to increased AI chip demand in 2025 [7]. - This concentration in semiconductors creates vulnerability; any downturn in the semiconductor cycle or supply chain disruptions could adversely affect AVEM [7].

Core Insights - The A-share market experienced a strong rebound on October 15, with the Sci-Tech Chip 50 ETF (588750) rising nearly 1%, attracting over 2.3 billion yuan in capital over the past 10 days, reaching a new high of over 6.5 billion yuan in total scale since its launch [1][3]. Group 1: Market Performance - The majority of the constituent stocks of the Sci-Tech Chip 50 ETF saw significant gains, with Haiguang Information rising over 5% and Cambrian Technologies increasing over 3% [3]. - Cambrian Technologies is set to release its Q3 report on October 18, following a historical high in stock price after its H1 report on August 28 [3]. - Other constituent stocks such as Chipone, Huahong, and SMIC rose over 1%, while companies like Lanke Technology and Hu Silicon Industry saw declines of over 1% and 2%, respectively [3]. Group 2: Industry Developments - The 2025 Bay Chip Exhibition was held in Shenzhen, where a subsidiary of Xinkailai, Qiyunfang, introduced two domestically developed EDA (Electronic Design Automation) software products, filling a gap in high-end electronic design software technology in China [4]. - The EDA market in China has a domestic market share of less than 20%, primarily dominated by overseas giants like Synopsys, Cadence, and Siemens EDA [5]. - Recent U.S. policies have restricted EDA product exports to China, highlighting EDA's strategic importance in the ongoing U.S.-China tech competition [5]. Group 3: Growth Potential - The Sci-Tech Chip Index is expected to see a net profit growth rate of 71% in H1 2025, with an annual growth rate of 100%, significantly outperforming peers [12]. - The index's strong upward elasticity is evident, with a maximum increase of 186.5% since September, indicating robust risk-adjusted returns and stable performance [12]. - The focus on high-end upstream and midstream segments of the chip industry positions the Sci-Tech Chip Index for strong growth potential amid accelerating domestic substitution [11][12].