iShares MSCI All Country Asia ex Japan ETF

AAXJ

Market cap $3.84B

The iShares MSCI All Country Asia ex Japan ETF offers superior diversification across Asia ex Japan, with 915 holdings and meaningful exposure to India and Southeast Asia. The iShares Asia 50 ETF is highly concentrated, with 51% in four tech stocks, exposing investors to significant concentration and the "AI trade" risk. AAXJ's broader sector and geographic mix, including India's growth, justify its slightly higher 0.72% expense ratio and 20x P/E.

Global stocks are still outperforming US shares so far in 2026, extending last year's winning run. Using a set of ETFs through yesterday's close (Jan. 21), all the major equity regions of the world are maintaining a healthy lead over the US.

BFI Infinity Ltd. increased its AAXJ position by 132,421 shares; the estimated trade value is $12.30 million based on quarterly average pricing.

Global equities strategies are having a moment this year. The SPDR S&P 500 ETF in isolation looks strong, posting an 18.3% year-to-date gain.

Among APAC equity markets, Australia has a higher beta to oil prices while India, Indonesia and Thailand have lower betas. Domestic political uncertainties have been one main reason for the decoupling trend seen in Indonesia and Thailand.

Global equities ex-US were already leading US stocks in 2025 by a wide margin ahead of the trade deal announced this week between the US and Japan. Vanguard International Stock ETF rose sharply yesterday, and is now up 21.8% year to date.

The MSCI Asia Ex Japan Index includes two developed and eight emerging Asian markets, aligning closely with the MSCI AC Asia Index over the past decade. This ETF tracks the AC Asia Ex Japan Index invests in over 900 companies, with a management fee, offering broad exposure to Asian markets. Many Japanese equities trade well below book value, presenting potential undervaluation opportunities compared to the MSCI EM Index.

iShares MSCI All Country Asia ex Japan ETF focuses on emerging markets like India, China, and South Korea, excluding Japan due to its developed market status. AAXJ has underperformed long-term, delivering only 16.3% five-year total return, but has recently outperformed the S&P 500. The ETF's top holding, Taiwan Semiconductor, faces risks from geopolitical tensions, while its financials and consumer discretionary sectors have driven recent gains.

The election victory has fueled a strong rally in US equities, but Trump's comeback is seen as a new risk factor elsewhere as Washington prepares to pivot to new edition of an “America First” policy. The latest surge in US shares has widened the lead for SPDR S&P 500 ETF (SPY) year to date.

While the China macro story of ongoing transition is a headwind to the rest of Asia, there is more to the region's economic health than this.