Right Place, Right Time for Emerging Markets ETF

This article was originally published on ETFTrends.com.

The Emerging Markets Internet & Ecommerce ETF (NYSEArca: EMQQ) is up more than 9% this year, continuing its run of substantial out-performance of traditional emerging markets benchmarks.

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.

Data suggest EMQQ's growth story is still in the early innings. Revenue growth from EMQQ member firms is expected to be jaw-dropping in the near-term.

"We expect revenue growth of 30-35% in 2018 – which is incredible considering the size of these companies, and is perhaps unprecedented for any sector ever,” EMQQ's Kevin Carter told ETF Trends.

EMQQ offers dedicated exposure the growing emerging market consumer sector, 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.

"85% of the world live in developing nations – emerging and frontier markets,” said Carter. “Just as the internet and mobile phones have changed how we consume, in the developing world this is even more powerful as most of the new consumers have never had a computer or internet access before. In effect they are leapfrogging traditional consumption and are 'digital natives.'”

The rising middle-income class consumers are using smartphones and broadband mobile connections to access the internet. EMQQ holds over 40 internet and e-commerce companies operating in Emerging and Frontier Markets including China, India, Brazil, Russia, South Korea, Taiwan, South Africa, Mexico, Argentina, Malaysia, Thailand, Indonesia, Vietnam, Philippines, Turkey, Czech Republic, Poland and Colombia.

The long-term fundamental story for EMQQ remains compelling.

“The fundamental story of EMQQ is growth – I don’t believe that there has ever been a sector of publicly traded companies that have grown as fast as those in EMQQ – a compound average growth rate >40% for past 7 years,” said Carter.

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