Emerging markets stocks are believed to be beneficiaries of Joe Biden’s ascent to the White House, but investors looking to avoid potential disappointment and embrace dominant equities in developing economies may do well to consider and Internet and online retail fare.
What Happened: Plenty of exchange-traded funds check those boxes, including the newest member of the group, the Global X Emerging Markets Internet & E-commerce ETF (NASDAQ: EWEB).
Whether EWEB proves to be a well-timed addition to the world of ETFs remains to be seen, but, appropriately so, the fund debuted on Nov. 11, which just happened to be China’s Singles Day, the world’s largest online retail event.
Why It’s Important: EWEB extends a stretch of nifty launches by Global X, marking the third such launch in about as many weeks. The issuer is one of the dominant forces when it comes to thematic funds and has plenty of successful offerings addressing both emerging markets and online retail, including the Global X E-commerce ETF (NASDAQ: EBIZ).
As for EWEB, the rookie ETF holds 49 stocks and is designed to be a diversified spin a compelling niche, that being emerging markets e-commerce, but that does lead to a massive China weighting at 74%. Brazil, South Korea and South Africa – EWEB’s second- through fourth-largest geographic exposures – combine for about 18% of the fund’s roster.
China heft aside, EWEB is a credible play on rising incomes in developing economies, something data confirm is happening.
“Between 2000 and 2015, EMs populations grew by 21% while retail sales per capita were nearly 3x higher, rising from $525 to $1,490,” according to Global X research. “Meanwhile, EMs share of total global retail sales rose from 32% in 2000 to 51% in 2015 while EM retail sales growth outpaced DMs with a Compound Annual Growth Rate (CAGR)of 11.4% 2000-2008 versus 5.7% for DMs during the same time period.”
What’s Next: EWEB offers long-term investors some promise as it’s buoyed by factors such as rising digitization, incomes and urbanization.
“Wage growth is beginning to shift the socioeconomic profiles of many EMs, especially those in Asia,” notes Global X. “At a high-level, there were 3.2 billion people in the global middle class in 2017 with an estimated 150 million more joining annually. Overwhelmingly, with a projected 88% by 2023, these new entrants will be from Asia.”
The new ETF charges 0.65% per year, or $65 on a $10,000 investment.
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