Capitalizing on BRICS-11 Economic Expansion: Which ETFs Offer the Best Entry Points?

The recent BRICS expansion has captured investor attention. When the organization welcomed Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates to join the original five members—Brazil, Russia, India, China, and South Africa—a significant geopolitical and economic shift took place. This enlarged bloc, now comprising 11 nations, commands 36% of global GDP and represents 47% of the world’s population. For investors seeking exposure to this growing economic alliance, several ETF options provide viable pathways into the underlying markets.

Understanding the Investment Opportunity

The BRICS-11 expansion reflects a broader trend toward multi-polar economic structures. Investors are now examining ETF vehicles that track these emerging market economies. To assess suitable options, we can establish clear criteria: funds must maintain minimum net assets of $250 million, showcase median market capitalizations of $1 billion, and deliver dividend yields exceeding 1.5%.

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

Among the available ETF options, the SPDR S&P China ETF (NYSEARCA: GXC) represents the most focused approach to BRICS exposure. With $857.4 million in net assets and established in March 2007, this fund tracks the S&P China BMI Index, comprising domestically-based Chinese stocks accessible to international investors.

The concentration here is pronounced: China represents 99.67% of net assets. The top 10 holdings account for 34.3% of portfolio weight, with Tencent (OTCMKTS: TCEHY) and Alibaba (NYSE: BABA) dominating more than half of the top positions. The fund employs a sampling methodology, holding 945 stocks despite the index containing 2,044.

Sector composition leans toward consumer discretionary (27.25%), communication services (16.93%), and financial services (15.22%). The weighted average market capitalization stands at $88.5 billion with a price-to-book ratio of 1.24x and P/E ratio of 10.10x. The dividend yield reaches 2.93%.

Historical performance tells an interesting story: a $10,000 investment at inception was valued at $13,302 as of September 1. However, the fund has experienced significant volatility—mid-2020 saw that same initial investment worth over $22,000 before declining to current levels.

WisdomTree Emerging Markets State-Owned Enterprises Fund (XSOE): Diversified Exposure

The WisdomTree Emerging Markets State-Owned Enterprises Fund (NYSEARCA: XSOE) offers a different approach by focusing on emerging market companies with less than 20% state ownership. This fund tracks the WisdomTree Emerging Markets ex-State-Owned Enterprises Index, established in August 2014.

With $2.2 billion in net assets across 586 holdings, XSOE presents greater diversification than its China-focused counterpart. The aggregate market capitalization of all holdings reaches $8.18 trillion. Large-cap stocks ($10 billion or more) constitute nearly 69% of the portfolio.

Geographically, China leads at 25.22% of holdings, followed by India (19.31%) and Taiwan (16.94%). These allocations provide broader BRICS-11 exposure than the China-exclusive strategy. Sector weighting emphasizes technology (23.16%), consumer discretionary (19.81%), and financial services (15.57%).

Valuation metrics show an average price-to-earnings ratio of 18.45x and price-to-sales ratio of 1.35x. Since its December 2014 inception, the fund has delivered an annualized return of 3.4% through June 30, 2023. The current dividend yield stands at 2.6%.

iShares MSCI Emerging Markets Ex China ETF (EMXC): Broadest Regional Diversification

The iShares MSCI Emerging Markets Ex China ETF (NASDAQ: EMXC) commands the largest asset base among these options, with $5.2 billion in net assets. Launched in July 2017, this passive fund tracks the MSCI Emerging Markets Ex China Index, capturing mid and large-cap securities from 23 of 24 emerging market economies.

By excluding China, EMXC redirects investor capital toward alternative BRICS members. India dominates the regional allocation at 21.50%, with Taiwan (21.04%) and South Korea (17.95%) rounding out the top three. Within BRICS specifically, India, Brazil, and South Africa maintain significant positions. The BRICS-11 expansion adds Saudi Arabia and the United Arab Emirates to the fund’s exposure footprint.

Sectoral distribution reflects emerging market characteristics: technology leads at 26.79%, followed by financials (24.71%) and materials (10.12%). The top 10 holdings represent 23.58% of total assets, with 705 total holdings across the portfolio. Average market capitalization reaches $30.2 billion, and the dividend yield sits at 2.3%.

Performance history demonstrates resilience: a $10,000 investment at the fund’s 2017 launch was valued at $11,779 as of September 1—a modest but positive trajectory amid market volatility.

Making the Selection

Each ETF presents distinct BRICS-11 exposure profiles. GXC offers concentrated Chinese market participation but carries higher volatility risk. XSOE balances diversification across emerging markets while maintaining meaningful China exposure and lower state ownership constraints. EMXC provides the broadest emerging market reach while strategically excluding China, allowing investors to access India, Brazil, and South Africa alongside the newer BRICS members.

The choice depends on individual risk tolerance, diversification preferences, and specific allocation objectives within the broader BRICS-11 growth narrative.