With over 2,000 exchange traded products listed in the U.S., hardly a day goes by without at least one celebrating an anniversary of some kind. One of the more noteworthy anniversaries in the world of exchange traded funds is the third anniversary of the EMQQ Emerging Markets Internet & E-Commerce ETF EMQQ.
Earlier this month, EMQQ celebrated its third anniversary and did so in style. The fund is up 73 percent year-to-date, making it one of the best-performing, non-leveraged ETFs this year.
“EMQQ seeks to track, before fees and expenses, the performance of EMQQ The Emerging Markets Internet and ECommerce Index, which requires that its constituents derive at least half of their revenue from Internet and Ecommerce businesses in emerging or frontier markets,” according to a statement from EMQQ's issuer.
The EMQQ Story
While traditional, cap-weighted emerging markets benchmarks have recently increased their exposure to fast-growing Internet and technology stocks, these indexes still have comparatively light allocations to some of the more exciting emerging markets themes. That has opened the door for more tactical ETFs, such as EMQQ, to attract investors' assets.
Indeed, that is what EMQQ, particularly this year. EMQQ has about $350 million in assets under management, of which nearly $285 million has flowed into the fund just this year. More importantly, EMQQ's performance tops that of standard emerging markets benchmarks.
“As of November 13, 2017, the fund had $347.57 million in assets under management, and had returned an average of 14.92% annually since launch, compared to 10.24% percent for the S&P 500 and 5.70% percent for the MSCI Emerging Markets Index,” according to EMQQ's issuer.
Usual Suspects
Although EMQQ is not restrained at the geographic or sector levels, the ETF is predictably heavily allocated to China. Several of the ETF's top 10 holdings are Chinese Internet giants, including Tencent Holdings Ltd. TCEHY, Alibaba Group Holdings BABA and Baidu.com Inc. BIDU. That trio combines for 26.7 percent of EMQQ's roster.
China accounts for nearly two-thirds of EMQQ's underlying index while South Korea and Russia combine for nearly 21 percent.
“The populations in the emerging markets as defined by MSCI are younger and growing faster than in the developed world, and are in general becoming more affluent,” said Kevin Carter, co-founder and chief executive officer of EMQQ Index. “At the same time, these emerging market countries are leap frogging the traditional bricks and mortar way of doing business and moving substantial portions of their economies directly online. We think these are long running secular trends that could continue to drive ecommerce and EM growth for the foreseeable future.”
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