Emerging markets are beginning to strengthen and investors may do well with focusing on a targeted ETF strategy that covers the growing consumer base.
It was a “good year in 2017, and I suspect another good year in 2018,” Kevin Carter, Founder of EMQQ, said at the Inside ETFs 2018 conference. “The key with the emerging markets is the consumer. That’s what the growth is, and just as the developed world is shifting our consumption from big-box retailers to smartphones, the same thing is happening there. I’m confident it will be one of the greatest, the strongest growth sectors for 2018 in terms of revenue.”
Investors interested in gaining exposure to the emerging market consumer growth opportunity can look to something like the Emerging Markets Internet & Ecommerce ETF (NYSEArca: EMQQ), notably those related to online retailers or the quickly expanding e-commerce industry. To be included within the ETF’s underlying index, companies must derive their profits from Ecommerce or Internet activities and include search engines, online retail, social networking, online video, e-payments, online gaming and online travel.
EMQQ primarily focuses on the internet and e-commerce 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.
“You have a billion people in China that are walking around with a shopping mall in their pocket,” Carter said.
The expansion in the emerging market consumer market is being largely fueled by the rapid adoption of smartphone technologies. Many emerging market consumers’ first interaction with the internet has been through a smartphone or digital handheld device. These consumers are also more apt to utilize their smartphones to shop than to go to big-box retailers.
The emerging market internet segment has also capitalized on the renewed focus on growth-oriented stocks, along with the search for greater value in international markets, such as developing company stocks, as the U.S. equity rally extends with even pricier valuations.
For more ETF-related commentary from Tom Lydon and other industry experts, visit our video category.