New Emerging Internet ETF Fills Big EEM Void

November 21, 2014

The Need For EMQQ

Here are EMQQ’s index weightings by country, based on holdings posted on EMQQ’s website.

Country EMQQ Index
Weighting (%)
China 66.7
South Korea 10.9
South Africa 7.0
Russia 5.8
Argentina 4.4
Brazil 2.5
India 1.7
Taiwan 0.8

 

 

 

 

 

 

Source: emqqindex.com

For now, China accounts for two-thirds of the fund’s weighting. But looking ahead, EMQQ is poised to incorporate up-and-coming local e-commerce firms from emerging economies, which could change the current weightings.

Alpha Or Beta

Many investors might turn to EMQQ for momentum in a high-growth sector, but beyond striving for outsized returns, EMQQ can simply complement EEM and VWO, from a purely “beta” perspective.

In many respects, I see EMQQ filling the holes of EEM and VWO similar to the way the KraneShares CSI China Internet ETF (KWEB | B-21) fills the gaps in the iShares MSCI China ETF (MCHI | B-37).

For broad emerging markets investors, it’s really about owning the whole package, which, unfortunately, EEM and VWO falls short of (at least for now). EMQQ fills those gaps and offers consumer-focused companies that would otherwise dilute the overbearing hand of state-owned enterprises in most broad emerging markets funds.


At the time this article was written, the author held a long position in Alibaba (BABA). Contact Dennis Hudachek at [email protected], or follow him on Twitter @Dennis_Hudachek.


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