Vanguard's Emerging Markets ETF: A New Step in U.S.-China Economic Decoupling

Vanguard, a major investment manager, has announced plans for a new exchange-traded fund (ETF) that excludes Chinese stocks, a response to the increasing economic separation between the U.S. and China. This development comes after pressure from Missouri State Treasurer Vivek Malek, known for his advocacy against investments in China.

Vanguard filed with the U.S. Securities and Exchange Commission to launch the Vanguard Emerging Markets Ex-China ETF. This filing followed Malek's meetings and correspondence with Vanguard, emphasizing a need for state investments that exclude Chinese equities. He successfully lobbied for the divestment from Chinese stocks in Missouri's state pension fund and advocated for a China-free option in the state's 529 college savings plan.

The move represents a growing trend, with 13 ex-China ETFs on the market. Malek and other Republicans argue that such investments pose significant economic, legal, and geopolitical risks. The new ETF reflects a broader political objective and collaboration between conservative policymakers and financial institutions.

(With inputs from agencies.)