Module IX·Article III·~3 min read
MSCI EM Index Structure
Emerging Markets and China
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MSCI EM Index Structure
MSCI Emerging Markets Index: Anatomy of the Main Benchmark
The MSCI Emerging Markets Index is the most widely used benchmark for emerging markets equities. Understanding its structure is critically important for managing EM exposure and building a portfolio.
Country Weights (2024)
| Country | Weight | Key Companies | Sector Driver |
|---|---|---|---|
| China | ~25% | Tencent, Alibaba, Meituan | Consumer, Tech |
| India | ~18% | Reliance, HDFC, Infosys | Financials, IT Services |
| Taiwan | ~17% | TSMC, MediaTek, Hon Hai | Semiconductors |
| South Korea | ~12% | Samsung, SK Hynix, LG | Tech, Electronics |
| Brazil | ~5% | Petrobras, Vale, Itau | Commodities, Financials |
| Saudi Arabia | ~4% | Saudi Aramco, Al Rajhi | Energy, Financials |
| South Africa | ~3% | Naspers, FirstRand | Consumer, Financials |
| Mexico | ~2% | America Movil, Femsa | Telecom, Consumer |
| Others | ~14% | Indonesia, Thailand, Malaysia, Poland, Chile, etc. |
Sector Structure
| Sector | Weight | Features |
|---|---|---|
| Information Technology | ~23% | TSMC dominates, semiconductors = ~50% of the sector |
| Financials | ~22% | Banks, insurance, mostly domestic |
| Consumer Discretionary | ~13% | E-commerce (Alibaba, JD), Auto (BYD) |
| Communication Services | ~9% | Tencent, internet platforms |
| Materials | ~7% | Mining, chemicals |
| Energy | ~5% | Aramco, Petrobras, Reliance |
| Industrials | ~6% | Infrastructure, transportation |
| Others | ~15% | Healthcare, Utilities, Real Estate, Staples |
Index Concentration
Top 10 Companies = ~25% of the Index
| # | Company | Country | Weight |
|---|---|---|---|
| 1 | TSMC | Taiwan | ~8% |
| 2 | Tencent | China | ~4% |
| 3 | Samsung Electronics | Korea | ~3.5% |
| 4 | Alibaba | China | ~2% |
| 5 | Reliance Industries | India | ~1.5% |
| 6-10 | HDFC, Infosys, Meituan, SK Hynix, ICICI |
Concentration Risk: One TSMC = 8% of the index.
Problems with Taiwan could collapse the entire benchmark.
ETFs for Investing in EM
| ETF | Provider | TER | AUM | Features |
|---|---|---|---|---|
| VWO | Vanguard | 0.08% | $80+ bn | FTSE EM (excluding Korea) |
| EEM | iShares | 0.68% | $20+ bn | MSCI EM, liquid options |
| IEMG | iShares | 0.09% | $70+ bn | MSCI EM + Small Caps |
| SCHE | Schwab | 0.11% | $10+ bn | Low-cost MSCI EM |
MSCI EM vs FTSE EM: Key Difference
| Index | South Korea | Number of Stocks |
|---|---|---|
| MSCI EM | Included | ~1,400 |
| FTSE EM | Excluded (DM) | ~1,900 |
Vanguard VWO follows FTSE, therefore does not include Samsung and SK Hynix.
Ex-China Options
For investors wishing to control China exposure separately:
- EMXC — iShares MSCI EM ex-China
- China separately — MCHI, FXI, KWEB
CIO Recommendations
- Understand what you are buying — EM = 60% Asia, 40% TSMC + Tencent + Samsung
- Diversify index risk — complement with country-specific ETFs
- Watch Korea classification — MSCI may reclassify → outflow from EM
- China weight — decide whether you need a separate China allocation
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