Key Highlights

● EMEQ fell 0.89% to $59.16 in Friday's October 16 intraday session.

● The fund holds approximately 30 to 40 high-conviction emerging market equities.

● Nomura charges a 0.85% expense ratio for EMEQ's active research mandate.

● EMEQ distributes dividends annually, with a 30-day SEC yield near 0.66%.

The Nomura Focused Emerging Markets Equity ETF (NASDAQ:EMEQ) fell 0.89% to $59.16 in intraday trading on Friday, October 16, rejecting the bloated indexing approach of passive emerging market funds and utilizing intensive, on-the-ground fundamental research to assemble a high-conviction, concentrated portfolio of high-quality private growth franchises.

Passive emerging market exchange-traded funds, such as the benchmark iShares Core MSCI Emerging Markets ETF (NYSE American:IEMG), suffer from acute structural flaws: they hold thousands of securities and allocate massive capital to state-owned enterprises (SOEs), inefficient sovereign banks, and politically directed resource extractors with poor minority shareholder protections.

By bypassing heavily regulated state-owned banks and cyclically depressed commodity producers to concentrate capital in premier private technology, consumer, and financial compounders, EMEQ seeks alpha independent of broad emerging market benchmark drag.

Legal Architecture & Unconstrained Active Mandate

EMEQ is registered under the Investment Company Act of 1940 as an open-end management investment company, operating as an active investment series of the Nomura ETF Trust. The fund launched in September 2024. Nomura Asset Management U.S.A. Inc. serves as the registered investment advisor, leveraging Nomura’s extensive, decades-old research presence across emerging Asian, Latin American, and EMEA markets. The fund is managed by Liu-Er Chen, CFA, and the Emerging Markets Equity team at Delaware Management Company, part of Nomura Asset Management.

Unlike passive index-tracking funds bound by market-capitalization benchmarks, EMEQ operates with an unconstrained active mandate. The portfolio management team conducts rigorous bottom-up forensic accounting audits, corporate governance reviews, and management interviews, evaluating companies on return on invested capital (ROIC), cash-flow generation, and structural competitive moats.

Portfolio Composition: Concentrated Secular Growth Leaders

EMEQ holds a concentrated portfolio of approximately 30 to 40 high-conviction emerging market equities, avoiding broad index dilution. The portfolio concentrates capital in premier private franchises benefiting from rising domestic consumption, digital financial inclusion, and international supply chain reorganization.

Its top portfolio holdings include global semiconductor foundries like Taiwan Semiconductor Manufacturing Co. (NYSE:TSM), Indian private banking and consumer leaders like HDFC Bank (NYSE:HDB) and TCS, Latin American e-commerce and fintech champion MercadoLibre (NASDAQ:MELI), alongside high-performing South Korean and Southeast Asian technology hardware compounders. Crucially, the fund maintains strict limits against investing in debt-burdened state-owned monopolies.

Cost Structure, Operating Expenses & Active Research Overhead

Nomura charges an annual management expense ratio of 0.85% for EMEQ. While higher than generic passive emerging market index funds, this fee covers the significant analytical overhead of maintaining dedicated local emerging market research teams, forensic accounting audits, and multi-country foreign exchange execution.

Active management allows the fund to dynamically navigate sovereign regulatory risks: the managers can rapidly reduce exposure to countries facing political instability, currency devaluation, or hostile regulatory interventions, reallocating capital into economies with stable macroeconomic frameworks and strong legal protections.

Performance Dissection: Active Alpha & Structural Growth

In intraday trading on Friday, October 16, EMEQ opened at $59.34 and traded between $59.01 and $59.34, against a previous close of $59.69. Its 52-week range runs from a low of $37.02 to a peak of $78.71. Over the past year, the fund has dramatically outperformed broad emerging market benchmarks like the MSCI Emerging Markets Index.

That outperformance was driven by the team's disciplined avoidance of debt-burdened Chinese real estate firms and sluggish state-owned banks, while over-weighting high-growth private enterprise compounders in India, Taiwan, and Latin America that generated record operating earnings and multiple expansion.

Distribution Profile, Dividend Yield & Form 1099 Taxation

EMEQ distributes dividend income annually, supported by the operating cash flows of its profitable portfolio companies. The fund carried a 30-day SEC yield of approximately 0.66% as of October 2026.

From a taxation standpoint, EMEQ provides standard Form 1099-DIV reporting. Dividends qualify as qualified dividend income (QDI) for eligible US investors, and the fund completely avoids the administrative burdens of Schedule K-1 partnership tax forms. Furthermore, shareholders benefit from foreign tax credit reporting, allowing taxable accounts to recover overseas dividend withholding taxes on their federal filings.

Secondary Market Liquidity & Lead Market Making

Trading under the ticker EMEQ, the fund maintains active secondary market liquidity supported by institutional market makers and authorized participants. Intraday bid-ask spreads typically hover between four and eight cents per share during normal US trading hours.

Because the portfolio holds a concentrated basket of highly liquid emerging market blue chips that trade on major international exchanges or via US-listed American Depositary Receipts (ADRs), authorized participants execute block creation and redemption trades with minimal pricing slippage relative to net asset value.

Primary Investment Risks: Emerging Market Currency & Sovereign Volatility

Investing in EMEQ involves notable sovereign and currency risks. Emerging market currencies are historically volatile: if local currencies depreciate sharply against the US Dollar, dollar-denominated fund returns suffer direct foreign exchange drag.

Additionally, developing economies face political uncertainties, sudden changes in trade policy, capital controls, and heightened sensitivity to global commodity price swings. Active manager risk is also pronounced, as concentrated portfolios carry higher idiosyncratic stock-specific volatility.

Focused Conviction Over Index Breadth

The Nomura Focused Emerging Markets Equity ETF replaces index breadth with a concentrated, actively managed portfolio of roughly 30 to 40 names.

Its mandate sets strict limits against investing in debt-burdened state-owned monopolies.