'EMQQ' Has Been Outperforming Other Emerging Markets ETFs

E-commerce has been an outperforming theme among exchange traded funds focused on the developing economies this year.

The Emerging Markets Internet & Ecommerce ETF (NYSEArca: EMQQ), which includes access to EM companies related to online retailers or the quickly expanding e-commerce industry, increased 74% in 2020, compared to the 14% gain for the widely observed MSCI Emerging Markets Index.

EMQQ YTD Performance

“When the coronavirus comes to town, you do even more on your phone than you did before – and that’s true all over the world,” Kevin Carter, Founder and CEO, EMQQ, told Bloomberg. “This is where the growth is.”

The push toward online retail or e-commerce has been years in the making, but the sudden drive toward adoption of digital schooling, shopping, entertaining, and communication in emerging economies has only accelerated as a result of the coronavirus pandemic. The trend has more room to run.

Looking ahead, we may see an even greater reliance on digitalization with younger generations coming of age and rising innovation, Carter said. Internet and e-commerce business models are receiving a slight boost, notably from an increase in demand for widely adapted e-commerce businesses. The shift in day-to-day habits from lockdown measures to contain the pandemic has accelerated the adaption of certain platforms, such as distance learning, telemedicine, and food delivery, among others.

“This story was already booming before the coronavirus came to town,” Carter added. “It remains the story, pandemic or no pandemic.”

The theme has so far resonated with investors, who funneled $611.20 million into EMQQ over the course of 2020, as emerging market internet and e-commerce companies led the charge from the March lows. Overall, emerging market ETFs attracted about $2.47 billion in net inflows this year on growing optimism for a bullish 2021 outlook after investors yanked as much as $20 billion from emerging market funds.

To be included within the ETF’s underlying index, companies must derive the majority of their profits from E-commerce or Internet activities like search engines, online retail, social networking, online video, e-payments, online gaming, and online travel.

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