Betting big on e-commerce in emerging markets

By Peter Barnes/ Market Real List

With today’s market volatility and lower returns, investors want to be more agile and focused with their investment strategy while seeking higher growth. In this article, we’ll discuss an ETF that provides exposure to the fast-growing Internet and E-Commerce space in diverse emerging markets.

The Emerging Markets Internet ETF (EMQQ) tracks an index of leading Internet and E-Commerce companies in emerging markets. EMQQ offers investors exposure to online consumption growth in emerging markets like India (INDA), China (YAO), Brazil (EWZ), Turkey (TUR), Russia (RSX), and Indonesia (EIDO). To be included in the portfolio, the constituent companies must derive their profits from E-Commerce or Internet-related activities. EMQQ’s portfolio involves companies operating in segments such as search engines, online retail, social networking, online video, e-payments, online gaming, and online travel.

Investment strategy

The EMQQ ETF tracks the index that provides diversified exposure to the Internet and E-Commerce sectors in Asia, Latin America, Africa, the Middle East, and Eastern Europe. The index covers more than 40 companies operating in high-growth markets. Higher consumption growth and a lack of brick and mortar options in emerging markets represents a significant growth opportunity for E-Commerce companies. EMQQ targets potential winners from these markets.

Performance

Since its inception in November 2014, EMQQ has performed reasonably well. Over the past year, EMQQ has seen performance of 35.45%. 1 In its first full year of operations in 2015, the ETF gained 4.9%. During the same period, the S&P 500 fell 0.7%.