Vanguard Emerging Markets ex-China returned 27.4%; iShares MSCI ex China returned 48.6%

A buyer of Vanguard Emerging Markets ex-China ETF AVEXC, which holds emerging-market stocks and leaves out China, was up 27.4% from the Thursday, October 2, 2025 close through Wednesday, September 30, with dividends reinvested. iShares MSCI Emerging Markets ex China ETF BEMXC, which holds emerging-market stocks and also leaves out China, returned 48.6% from that same close, dividends reinvested. The gap is 21.2 percentage points.

FTSE, the index provider behind AVEXC, counts South Korea as a developed market, so the fund does not hold it. MSCI, the provider behind BEMXC, counts Korea as emerging. At the end of August, Korea was 26% of that index.

On Wednesday, September 30, Samsung Electronics was 9.3% of BEMXC and SK Hynix was 7.2%, next to Taiwan Semiconductor at 19.3%. AVEXC does not hold the two Korean stocks.

In Korean won, Samsung returned 202% and SK Hynix returned 350% from the Thursday, October 2, 2025 close to that close, including dividends.

In dollars, iShares MSCI South Korea ETF CEWY, which holds South Korean stocks, returned 124% over the same stretch, dividends reinvested.

At the launch, Vanguard said buyers could pair AVEXC with Vanguard FTSE Developed Markets ETF AVEA, which holds developed markets outside the United States. Samsung is that fund's largest stock, at 2.6% on Wednesday, September 30. In BEMXC the same stock is 9.3%.

The 27.4% starts at the listing close, the price a buyer could have paid. Vanguard dates the shares to Tuesday, September 30, 2025, two days earlier. Vanguard's return from that date was less than a percentage point behind the FTSE Emerging ex-China Index at the end of August, after the fund had been ahead of the index at the end of June.

Vanguard had promised "low-cost, broadly diversified exposure" to emerging markets outside China, and named India, Taiwan and Brazil. At the end of August AVEXC held 1,001 stocks, with 45% in Taiwan and 22% in India. The index weights companies by their size in the market, and it had Taiwan Semiconductor at 23.4% and Taiwan at 45%.

BEMXC held $25.6 billion as of Tuesday, September 29, 2026. AVEXC held $269 million as of Monday, August 31, 2026.

The annual fee is 0.07%, against 0.25% for BEMXC. On that Tuesday, Vanguard's 30-day measure of the gap between the buying price and the selling price was 0.17% for AVEXC. iShares' 30-day median for BEMXC was 0.01%.

One round trip costs 0.16 percentage points more in AVEXC, close to the 0.18 percentage points the lower fee saves in a year.

A cap on the largest stock

In a supplement to the prospectus dated Thursday, September 17, Vanguard said the board had approved a new target index, the FTSE Emerging ex-China RIC 22.5/45 Capped Index. The change is expected this quarter.

Under FTSE's rule, no company can exceed 22.5%, and companies above 4.5% together cannot exceed 45%. Until the switch, AVEXC keeps the index it has.

By Wednesday, September 30, Taiwan Semiconductor was 23.1% of AVEXC. The coming limit is 22.5%, a difference of 0.6 percentage points.

Vanguard said the switch is not expected to raise the fee. It also said the trades may create gains the fund may have to pay out, and those payouts can be taxable.

What AVEXC leaves out is South Korea.