E-commerce has soared in frontier markets like South Korea and Brazil. South Korea has one of the highest rates of internet penetration and smartphone adoption in the world. Online shopping in Brazil has exploded in recent years and become more mobile-oriented. By 2025, the e-commerce market in India is expected to grow to $111.40 billion from $46.2 billion as of 2020.
Investors seeking exposure to internet companies in any emerging or frontier market country outside of China may want to consider the Next Frontier Internet & Ecommerce ETF (FMQQ). Its top country weightings at year-end were South Korea (at 27%), Brazil (13.3%), and India (12.7%).
The FMQQ Index is comprised of 60 names. As of February 3, its top holdings are Mumbai-based conglomerate Reliance Industries Ltd. (at 10.65%), Buenos Aires-based e-commerce firm MercadoLibre Inc. (at 7.97%), and South Korean internet conglomerate NAVER Corp. (at 6.73%).
All companies in the FMQQ Index are drawn from the three major regions of Asia, Latin America, and EMEA (Europe, Middle East, and Africa). FMQQ uses the same investment strategy as the Emerging Markets Internet & Ecommerce ETF (EMQQ) but does not contain China as one of the countries the fund invests in.
Since its inception, FMQQ has brought in $13.2 million in inflows.
FMQQ seeks to provide investment results that, before fees and expenses, generally correspond to the price and yield performance of the Next Frontier Internet and Ecommerce Index (FMQQetf.com). Securities must meet a minimum of a $300 million market cap and pass a liquidity screen that requires $1 million average daily turnover.
When the fund was launched in September, Kevin T. Carter, founder and CIO of both EMQQ and FMQQ, said that the goal of FMQQ was to “be an attractive alternative for investors who want to capture the budding opportunities in these ‘next frontier’ markets and/or complement their Chinese tech allocations and balance out their current portfolio weightings.”
The fund has an expense ratio of 0.86%.
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