How to Capitalize on BRICS Expansion: A Deep Dive Into 3 Essential ETFs

The geopolitical and economic landscape just shifted. When the original five BRICS members—Brazil, Russia, India, China, and South Africa—expanded their bloc by inviting Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates, they created a powerhouse representing 36% of global GDP and 47% of the world’s population.

For investors hunting for exposure to this emerging economic union, ETFs offer a practical entry point. But which ones should you watch? Let’s break down three contenders that give you direct or indirect access to the BRICS ecosystem.

The Largest Player: iShares MSCI Emerging Markets Ex China ETF (EMXC)

With $5.2 billion in net assets, EMXC dominates this category in sheer scale. Launched back in July 2017, this passive fund tracks emerging market mid- and large-cap stocks across 23-24 nations, pointedly excluding China.

The geographic breakdown tells the story: India claims 21.50% of the portfolio, Taiwan 21.04%, and South Korea 17.95%. Within the BRICS sphere, you’re getting exposure to India, Brazil, and South Africa. Add the expanded membership, and Saudi Arabia and the UAE join the mix.

Sector-wise, technology dominates at 26.79%, followed by financials at 24.71% and materials at 10.12%. The ETF holds 705 stocks total, with the top 10 representing 23.58% of assets. Here’s the kicker: a $10,000 investment from inception would have grown to $11,779 by early September. With an average market cap of $30.2 billion per holding and a 2.3% dividend yield, this ETF balances growth potential with steady income.

The State-Owned Enterprises Angle: WisdomTree Emerging Markets State-Owned Enterprises Fund (XSOE)

This fund takes a different approach. XSOE deliberately avoids companies with 20% or more state ownership, tracking the WisdomTree Emerging Markets ex-State-Owned Enterprises Index established in August 2014.

Managing $2.2 billion across 586 holdings, XSOE commands a combined market capitalization of $8.18 trillion among its positions. Large-cap stocks ($10 billion+) make up nearly 69% of the portfolio. China leads geographically at 25.22%, with India at 19.31% and Taiwan at 16.94%.

The sector allocation skews tech-heavy (23.16%), with consumer discretionary (19.81%) and financials (15.57%) rounding out the top three. Average price-to-earnings and price-to-sales ratios sit at 18.45x and 1.35x respectively. Since December 2014, annualized returns have clocked 3.4% through mid-2023, with a current 2.6% dividend yield.

The China-Focused Play: SPDR S&P China ETF (GXC)

Don’t sleep on GXC, despite being the smallest of the three at $857.4 million in net assets. This fund, operational since March 2007, offers pure-play exposure to China’s investable stock universe through the S&P China BMI Index.

The performance speaks volumes: $10,000 from inception ballooned to $13,302 by early September. Peak valuations hit over $22,000 in mid-2020 before consolidating. However, there’s a caveat—China represents 99.67% of net assets, so this is a concentrated bet, not diversification.

Tencent Holdings and Alibaba dominate the top 10 holdings, accounting for over half the allocation. Consumer discretionary (27.25%), communication services (16.93%), and financials (15.22%) lead sector weights. With 945 holdings tracking a 2,044-stock index through sampling, GXC maintains a weighted average market cap of $88.5 billion. The dividend yield sits at 2.93%, and valuation metrics show a price-to-book of 1.24x and P/E of 10.10x.

Which ETF Fits Your BRICS Strategy?

Each fund serves a different purpose. Want broad emerging market exposure tied to BRICS expansion? EMXC delivers scale and diversification. Prefer to avoid state-owned baggage while targeting growth? XSOE filters out the noise. Looking for concentrated China exposure within the BRICS framework? GXC offers that focused bet.

The BRICS expansion isn’t a fleeting moment—it signals a structural reordering of global capital flows. These three ETFs provide different lenses to capitalize on that shift.