ETF Trends
ETF Trends

The first broad emerging markets online retail-related ETF, the Emerging Markets Internet & Ecommerce ETF (NYSEArca: EMQQ), recently celebrated its third anniversary after a year of solid performance.

EMQQ now has $382 million in assets under management and jumped over 70.0% year-to-date. The ETF has generated an average annualized return of 15.5% over the past five-years, according to Morningstar data. In contrast, the S&P 500 returned an average 10.2% over the three-year period while the MSCI Emerging Market Index returned 6.6%.

The emerging market internet segment has capitalized on the renewed focus on growth-oriented stocks earlier this year, along with the search for greater value in international markets, such as developing company stocks, as the U.S. equity rally pushes into its ninth year with even pricier valuations.

While EMQQ may have a global focus, many of its internet and e-commerce names are from China, including Alibaba 9.4%, Tencent Holdings 10.2% and Baidu 7.1%, among others.

“EMQQ was created to provide investors with exposure to the growth of online consumption in emerging markets (EM),” Kevin Carter, co-founder and chief executive officer of EMQQ Index, which designed the index on which EMQQ is based, said in a note. “The populations in the emerging markets as defined by MSCI are younger and growing faster than in the developed world, and are in general becoming more affluent. At the same time, these emerging market countries are leap frogging the traditional bricks and mortar way of doing business and moving substantial portions of their economies directly online. We think these are long running secular trends that could continue to drive ecommerce and EM growth for the foreseeable future.”

EMQQ provides exposure to the internet and ecommerce sectors of the developing world, helping investors capitalize on the growth of consumption in emerging markets, which represents a significant growth opportunity as more than a billion people are expected to enter the consumer class in the coming decades.

The rising middle-income class consumers are using smartphones and broadband mobile connections to access the internet. EMQQ holds over 40 internet and e-commerce companies operating in Emerging and Frontier Markets including China, India, Brazil, Russia, South Korea, Taiwan, South Africa, Mexico, Argentina, Malaysia, Thailand, Indonesia, Vietnam, Philippines, Turkey, Czech Republic, Poland and Colombia.

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