Pictet Challenges EM Investing With New China-Free Equity ETF

NEW YORK, NY – April 23, 2026 – Swiss asset management giant Pictet Asset Management is making a significant new move in the U.S. market, launching two actively managed exchange-traded funds (ETFs) aimed at reshaping how American investors approach emerging markets. The new funds, Pictet Emerging Markets Debt ETF (EMFI) and Pictet Emerging Markets Rising Economies ETF (RISE), are designed to provide diversification for portfolios grappling with high domestic valuations and heavy concentration in technology stocks.

With a history of investing in emerging markets dating back to the late 1980s, the Geneva-based firm is leveraging its deep expertise to offer strategies that actively navigate the complexities of developing economies. The launch marks the firm's fifth and sixth active ETFs in the U.S., signaling a determined expansion into one of the world's most competitive investment arenas.

“As U.S. investors face a domestic landscape of high valuations and concentrated technology exposure, EMFI and RISE seek to offer access to global diversification across two fundamental asset classes,” said Elizabeth Dillon, CEO of Pictet Asset Management (USA). “Investing in emerging markets today requires a nuanced, active approach that recognizes the shifting fundamentals of global growth.”

A Differentiated Bet on 'Rising Economies'

What sets Pictet's new offering apart, particularly the RISE ETF, is its deliberate and unconventional country selection. The fund invests in equities from dynamic economies but notably excludes China, South Korea, and Taiwan. This is a stark contrast to many of the largest passive emerging market ETFs, such as the iShares Core MSCI Emerging Markets ETF (IEMG) and the Vanguard FTSE Emerging Markets ETF (VWO), where companies from those three regions often represent a substantial portion of the portfolio, particularly in the technology sector.

According to Young Jae Lee, Senior Investment Manager for Emerging Market Equities at Pictet Asset Management, this exclusion is a strategic decision based on long-term structural trends. “RISE targets dynamic economies like India, Brazil, and South Africa, countries with expanding working-age populations and strong GDP growth, but excludes China, South Korea, and Taiwan, which face demographic headwinds,” Lee explained.

This approach fundamentally alters the fund's composition, tilting it away from the tech giants that dominate traditional EM indices, such as Taiwan Semiconductor, Tencent, and Alibaba. Instead, RISE offers greater weight in sectors like Financials, Industrials, Materials, and Consumer Goods. For a U.S. investor whose portfolio may already be heavily skewed towards technology, this strategy presents a compelling tool for genuine diversification.

The decision taps into a growing sentiment among some allocators to seek more targeted exposure within the diverse emerging market universe, rather than a one-size-fits-all approach. By focusing on nations with more favorable demographic profiles, Pictet is making a long-term bet on the next generation of global growth drivers, powered by expanding middle classes and domestic consumption.

Seeking Yield and Stability in Emerging Debt

Complementing the equity strategy of RISE is the Pictet Emerging Markets Debt ETF (EMFI), which offers exposure to an entirely different asset class. The fund invests in U.S. dollar-denominated sovereign and corporate bonds from emerging market issuers. This “hard currency” approach is designed to capture the attractive higher yields often found in emerging market debt while sidestepping one of its most significant risks: local currency volatility.

By investing in bonds issued in U.S. dollars, the fund aims to insulate U.S. investors from the unpredictable swings of foreign exchange rates, which can quickly erode returns even if the underlying bond performs well.

“EMFI offers U.S. investors higher yields and diversification by investing in U.S. dollar-denominated emerging market sovereign and corporate bonds, minimizing currency risk,” noted Chris Preece, Investment Manager for Emerging Market Debt at Pictet. He added that stronger fundamentals and more proactive policies are enabling emerging markets to outpace developed economies, creating opportunities for debt investors.

This strategy provides a potential solution for income-focused investors searching for yield in a global environment where developed market bond yields may be less attractive. The fund offers a way to tap into the growth stories of emerging economies through their debt, often with a more stable return profile compared to equities.

Pictet's Strategic Push into the U.S. Market

The launch of EMFI and RISE is more than just the introduction of new products; it represents a key phase in Pictet's broader strategy to establish a strong presence in the U.S. active ETF market. The firm, part of a group founded in 1805, is a powerhouse in European asset management but a relatively new entrant in the U.S. ETF space. Its initial foray began in late 2025 with a suite of thematic and AI-enhanced funds, including the Pictet Cleaner Planet ETF (PCLN) and Pictet AI Enhanced US Equity (PQUS).

With over $20 billion managed in emerging markets strategies by a team of more than 50 specialists, the firm is now playing to its historical strengths. By offering these specialized, actively managed funds, Pictet is positioning itself not to compete with low-cost passive index trackers on price, but to win on expertise and differentiated strategy. With an expense ratio of 0.73% for RISE, it sits within the typical range for active management, which proponents argue is justified by the potential to navigate the inefficiencies and complexities inherent in emerging markets.

These markets, which contribute over 60% of global GDP, are far from monolithic. They present a landscape of immense opportunity but also heightened risks, including political instability, regulatory shifts, and market volatility. It is in this environment that active managers believe they can add significant value, or alpha, by selectively identifying winners and avoiding pitfalls—a philosophy at the core of Pictet's new offerings.