Many exchange traded fund investors focus on U.S. equities, ignoring potential opportunities overseas. However, emerging markets, which represent the largest economy of the world, are becoming too big to ignore.
On the upcoming webcast, Emerging Markets: Capture 3 Billion Consumers, Edward Kerschner, Chief Portfolio Strategist for Columbia Threadneedle Investments, and Jay McAndrew, Vice President and National Sales Manager of Strategic Beta for Columbia Threadneedle Investments, will review the developing market opportunity and why advisors should focus on the emerging market consumer.
For instance, the Columbia Emerging Markets Consumer ETF (NYSEArca:ECON) tries to provide exposure to 30 leading emerging market companies in the Consumer Goods and Consumer Services industries. The ETF has a 54.5% tilt toward consumer discretionary and 42.9% to consumer staple names.
Columbia Threadneedle argues that the consumer sectors may stand to benefit as many emerging economies transition from an export-oriented growth model to one focused on domestic spending. For example, The domestic consumer component of China’s economy recently surpassed 50% for the first time, reflecting the country’s shift toward domestic consumption and away from its previous export-focused business model.
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Moreover, the growth in consumer spending is being fueled by a rising middle-income group in the developing countries. This is also supported by a much younger demographic in the emerging countries, which have further room for income growth. As the economies continue to develop and wage growth improves, the rising consumer base will also be in a position to spend to improve their quality of life. Annual consumption in developing markets is expected to more than double by 2025 to $30 trillion.
ECON’s top country weights include South Africa 22.3%, China 21.1%, India 14.3%, Mexico 11.8% and Brazil 10.5%.
Top components include Naspers 10.2%, JD.com 5.9%, Ambev 5.5%, Fomento Economico Mexica 4.6% and Ctrip.com 4.6%.
Financial advisors who want to learn more about the emerging market opportunity can register for the Thursday, June 29 webcast here.