Emerging markets (EM) can provide opportunities for growth and bargain hunters. Add the internet to the mix, and it presents an even greater opportunity to capitalize on the strength of online technology.
EM countries have not been immune to the need for internet access, especially during the pandemic. Social distancing measures forced consumers in EM countries to rely more heavily on the internet in order to purchase goods and services.
“Since consumers in emerging economies are less likely to have access to brick and mortar businesses, they are moving much more quickly to adopt mobile Internet services, from digital cash to online education and shopping,” a Foreign Affairs article says.
“Digital revenue not only accounts for a higher share of GDP in emerging economies than developed ones, it is also growing faster: India, for instance, is home to as many new technology companies today as is France or Germany,” the article adds.
An EM Internet Opportunity
One fund to consider for internet growth in EM is the Global X Emerging Markets Internet & E-Commerce ETF (EWEB). The fund seeks to provide investment results that correspond generally to the price and yield performance of the Nasdaq CTA Emerging Markets Internet & E-commerce Net Total Return Index.
EWEB seeks to invest in companies positioned to benefit from the increased adoption of internet and e-commerce technologies in emerging markets. The fund comes with a 0.65% expense ratio, and the majority of its country allocation is towards China.
EWEB offers investors:
- High growth potential: By 2025, a forecasted 70% of the global population will have a mobile internet subscription, with new subscribers mostly coming from emerging markets.
- New consumer preferences: The pandemic has forced many businesses to offer goods and services online for the first time, which has shifted consumer expectations and expanded the domain of internet and e-commerce companies.
- Structural tailwinds: Innovative internet and e-commerce companies are sprouting up across the world. EWEB looks beyond Silicon Valley and other household names, targeting those positioned to capitalize from untapped growth in emerging markets.
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