GMO's New Beyond China ETF Targets Supply Chain Shift Winners

The GMO Beyond China ETF BCHI fund, designed to capture investment opportunities arising from the global realignment of supply chains, carries an expense ratio of 0.65%.

"This isn't just about avoiding China — it's about identifying the countries, sectors, and companies that are benefiting from this secular shift in global supply chains," said Arjun Divecha, founder of GMO Emerging Markets Equity.

This trend could mark the beginning of a multi-year transformation in global trade, Divecha says.

The fund, launched on Feb. 13, focuses on sectors like electric vehicles and renewable energy, which are gaining prominence as manufacturers seek stability in their operations. BCHI also picks companies based on the theme of nearshoring, which is the shifting of production closer to end markets.

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On that note, as global companies restructure their supply chains, Vietnam and Mexico are witnessing a surge in industrial real estate and port infrastructure investments. India's expanding tech services sector and Southeast Asia's growing consumer market are also set to benefit from increased trade diversification.

China's market sentiment has improved following a stimulus boost in late September and renewed optimism in the tech sector, driven by DeepSeek's AI app. According to Bloomberg, this recovery has led to outflows from ex-China EM ETFs like the iShares MSCI Emerging Markets ex China ETF EMXC, which previously saw rapid growth.

Despite short-term shifts in investor sentiment, GMO remains confident in sustained demand for its Beyond China strategy, citing the rise of cross-border supply chains bypassing China.

The launch of BCHI further expands GMO's ETF offerings, which include the GMO U.S. Quality ETF QLTY, GMO International Quality ETF QLTI, GMO U.S. Value ETF GMOV, and GMO International Value ETF GMOI. The firm is also planning to introduce the GMO Systematic Investment Grade Credit ETF.

GMO's latest ETF comes as the new trade realities are forcing global businesses adapt. With economic uncertainties and shifting trade policies prompting companies to diversify operations, BCHI provides exposure to regions and industries with tremendous growth potential.

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