Quick Read – EMXC beat VWO by delivering roughly 38% returns as removing China’s 20% weight concentrated gains in Taiwan, India, and South Korea’s semiconductor-driven markets. – VWO yields 2.34% versus EMXC’s 1.88%, and taxable-account holders should direct new contributions to…
XC rather than swapping and triggering capital gains. – The Vanguard FTSE Emerging Markets ETF (NYSEARCA: VWO) has long been the default choice for investors seeking a one-fund exposure to emerging markets. The fund is inexpensive, highly liquid, and provides exposure to more than 6,000 companies across developing economies
That broad approach has helped VWO grow into one of the largest emerging markets ETFs, with an expense ratio of just 0.06%. The challenge in 2026 is not the fund’s structure but what sits inside the portfolio. China remains one of the largest country allocations, representing roughly one-fifth of assets.
That exposure has helped during periods when Chinese equities performed well, but it has also weighed on returns when other emerging markets outpaced China. Why the China Weight Matters The Vanguard FTSE Emerging Markets ETF includes exposure to multiple Chinese share classes through its underlying index, including Hong Kong-listed companies and mainland A-shares. Major Chinese companies such as Tencent and Alibaba remain among the fund’s largest holdings, while financial companies and other China-focused businesses add further exposure.