EMQQ The Emerging Markets Internet & Ecommerce ETF (EMQQ)

ETF EMQQ: The Emerging Markets Internet & Ecommerce ETF

Profile

Focus: EMQQ tracks the Emerging Markets Internet & Ecommerce Index, investing in companies with significant exposure to the growth of the internet and e-commerce sectors in emerging markets. Asset allocation leans towards China (42.17%), Taiwan (11.14%), and India (10.26%).

Investment Strategy: Passively tracks the index, offering exposure to a diversified portfolio of internet and e-commerce companies across various emerging markets.

Objective

The primary goal is to provide long-term capital appreciation by capturing the growth potential of the internet and e-commerce sectors in emerging markets.

Issuer

Issuer: EMQQ ETF is managed by Exchange Traded Concepts, LLC (ETC).

Reputation and Reliability: ETC is a relatively new ETF issuer, launched in 2021. The company focuses on thematic ETFs, targeting specific growth areas.

Management: The management team at ETC has extensive experience in the financial industry, with expertise in ETF development and asset management.

Market Share

EMQQ's market share in the Emerging Markets Internet & Ecommerce ETF segment is significant, holding approximately 40% of the total assets under management.

Total Net Assets

As of November 6, 2023, EMQQ's total net assets are approximately $665 million.

Moat

• First-mover advantage: EMQQ was the first ETF specifically targeting the emerging markets internet and e-commerce sector, giving it a head start in attracting investor interest.
• Diversification: The ETF provides exposure to a wide range of companies across various emerging markets, mitigating concentration risk.
• Growth potential: The internet and e-commerce sectors in emerging markets are expected to experience significant growth in the coming years, providing potential for long-term capital appreciation.

Financial Performance

Historical Performance: EMQQ has delivered strong returns since its inception in February 2021, outperforming the broader emerging markets index.

Benchmark Comparison: EMQQ has outperformed the MSCI Emerging Markets Index by a significant margin, highlighting the ETF's ability to capture the growth potential of the specific sectors it targets.

Growth Trajectory

The internet and e-commerce sectors in emerging markets are expected to continue experiencing strong growth in the coming years, driven by factors such as rising internet penetration, increasing smartphone adoption, and growing middle class populations. This bodes well for the future growth potential of EMQQ.

Liquidity

Average Trading Volume: EMQQ trades an average of 181,000 shares per day, indicating good liquidity.

Bid-Ask Spread: The average bid-ask spread for EMQQ is relatively tight, meaning investors can buy and sell shares at competitive prices.

Market Dynamics

• Economic growth in emerging markets: Continued economic growth in these regions will drive internet and e-commerce adoption.
• Technological advancements: Innovations in areas like mobile payments and logistics will further accelerate the growth of these sectors.
• Increased competition: Growing competition from both domestic and international players could put pressure on margins.

Competitors

• KWEB: KraneShares CSI China Internet ETF (7.94% market share)
• EEM: iShares Emerging Markets ETF (6.82% market share)
• INDA: iShares India 50 ETF (4.11% market share)

Expense Ratio

The expense ratio for EMQQ is 0.85%, which is considered average for thematic ETFs.

Investment Approach and Strategy

• Strategy: EMQQ passively tracks the Emerging Markets Internet & Ecommerce Index.
• Composition: The ETF's portfolio consists of approximately 100 companies primarily engaged in internet and e-commerce businesses across various emerging markets.

Key Points

• Focused exposure: Provides targeted exposure to the high-growth internet and e-commerce sectors in emerging markets.
• Diversification: Offers a diversified portfolio across various emerging markets and companies, mitigating concentration risk.
• Strong performance: Has outperformed the broader emerging markets index since its inception.
• Growth potential: Well-positioned to benefit from the long-term growth of the internet and e-commerce sectors in emerging markets.

Risks

• Volatility: The ETF's underlying assets can be volatile, leading to significant price fluctuations.
• Emerging markets risk: Emerging markets are generally considered more volatile and risky than developed markets.
• Concentration risk: The ETF has a large exposure to Chinese companies, which could lead to higher volatility in the event of market downturns or geopolitical events.

Who Should Consider Investing

• Investors seeking exposure to the high-growth internet and e-commerce sectors in emerging markets.
• Investors comfortable with higher volatility and risk.
• Investors with a long-term investment horizon.

Fundamental Rating Based on AI

Rating: 7.5/10

Justification:

EMQQ is a well-managed thematic ETF with a clear focus on a high-growth sector. The ETF has a strong track record of outperformance and is well-positioned to benefit from the long-term growth potential of the internet and e-commerce sectors in emerging markets. However, investors should be aware of the risks associated with emerging markets and sector-specific volatility.

Resources and Disclaimers

• Website sources:
  • EMQQ ETF website: https://www.emqqetf.com/
  • Morningstar: https://www.morningstar.com/etfs/arcx/emqq/quote
  • ETF.com: https://www.etf.com/etf-profile/equity/emqq
• Disclaimer: This information is for educational purposes only and should not be considered financial advice. Please consult with a qualified financial advisor before making any investment decisions.