A technology and e-commerce-focused fund, the Kevin O’Leary-sponsored Global Internet Giants ETF (OGIG), is up more than 29% year-to-date, making it one of the best-performing funds in its category. More importantly, OGIG has a slew of favorable fundamental tailwinds that can continue boosting the fund going forward.
According to O’Shares, OGIG is a “rules-based ETF designed to provide investors with the means to invest in some of the largest global companies that derive most of their revenue from the Internet and e-commerce sectors that exhibit quality and growth potential.”
Some of OGIG’s top portfolio holdings include companies such as Alibaba, Amazon, Facebook, and Alphabet, each of which represents 6- to 6.5-percent of the overall portfolio. Also amongst the index’s 52 holdings are Chinese tech companies like YY, Baidu, 58, and JD. For long-term investors, OGIG’s exposure to ex-US e-commerce and Internet companies is relevant and important.
That international exposure is a critical difference-maker when evaluating OGIG against domestic Internet ETFs and a trait that explains OGIG’s out-performance of legacy funds in the category.
International Exposure Matters
“Asia and Africa on the other hand, have populations exceeding 4 billion and 1 billion, respectively, accounting for over 70%of the world’s population but have much lower adoption rates,” according to O’Shares.
Of course, China is a major player in a global e-commerce market, but many traditional Internet ETFs do not feature China exposure. OGIG does.
“E-commerce as a percent of total retail sales was~7% in 2015 and is forecasted to double by 2020 to over14%,” said O’Shares. “The U.S. accounted for an estimated 18% of the market in 2018, with China and the rest of the world at an estimated 46% and 36%, respectively.”
The digital advertising market in China is expected to undergo exponential growth over the next several years.
“Digital advertising in China totaled $38.9 billion in 2016 and is estimated to grow over 90% to $74.8 billion by 2019,” according to O’Shares research.
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