EMQQ Launches; ETF is the First Broad-Based Emerging Markets Internet and Ecommerce ETF

EMQQ, the first broad-based emerging markets Internet and Ecommerce exchange traded fund (ETF), began trading today. The new fund is designed to give investors exposure to the fast-growing Internet and Ecommerce sectors in Emerging Markets. Unlike the largest existing Emerging Market ETFs, EMQQ includes major Ecommerce companies like Alibaba, Baidu and Yandex, among others.

EMQQ seeks to track, before fees and expenses, the performance of EMQQ The Emerging Markets Internet and ECommerce Index, a new index created by Big Tree Capital, an investment firm focused on Emerging and Frontier Markets.

“The Ecommerce sector is one of the fastest growing sectors in Emerging Markets, but to date the major Emerging Markets ETFs have offered investors little or no exposure to the leading companies, including Alibaba, Baidu, and Youku in China, Yandex and Qiwi in Russia, Mercado Libre in Argentina, and MakeMyTrip in India,” said Kevin Carter, CEO. “Our index gives investors that exposure.”

The Index is currently comprised of 42 companies. Among the ten largest holdings are Alibaba (based in China; listed on the NYSE), Tencent (based in China; listed on the Hong Kong Stock Exchange), Naspers Holdings Ltd (based in South Africa; listed on the Johannesburg Stock Exchange) JD.com (based in China; listed on NASDAQ) Baidu (based in China; listed on NASDAQ), and Naver Corp. (based in South Korea; listed on the Korea Exchange). Another top-ten holding, Yandex, known as the “Google of Russia”, is headquartered in the Netherlands and trades on NASDAQ.

Carter notes that because of investment restrictions that require companies to be listed in their home markets, many of the major Emerging Markets indexes exclude companies like those listed above, which are often the biggest and fastest growing Internet and Ecommerce companies. Of the 42 stocks in EMQQ, 31 are U.S. venture capital-backed and 31 trade on the NYSE or NASDAQ exchanges. While state-owned enterprises (SOEs) make up about 30 percent of the two largest Emerging Markets ETFs currently on the market1, there are no SOEs in EMQQ.

“The indexes used by the biggest Emerging Markets ETFs have lots of differences from the index tracked by EMQQ,” Carter said. “They hold hundreds of state-owned companies including massive banks and oil companies, while most of Internet and Ecommerce companies are excluded. The EMQQ index helps investors get more exposure to the growth of online consumption in the developing world.”

Consumers Driving Emerging Markets Growth

Many economists believe that the future of Emerging Markets growth will be driven in large part by the growth of a consumer-oriented middle class, with Internet business models bypassing traditional approaches to consumption. At the same time, Emerging Markets generally continue to demonstrate higher economic growth than their developed counterparts, with younger populations and, in many cases, less debt.

“In spite of all the discussion about the Emerging Markets, in our view U.S. investors remain underweighted to this asset class,” said Carter, noting that Emerging Markets comprise 50 percent of global GDP and 80 percent of the world’s population, but make up just 2.5 percent of the average U.S. investor’s portfolio.

EMQQi has been licensed to Exchange Traded Concepts, the sponsor of EMQQ. It begins trading on November 13th, two days after China’s “Singles Day” (11/11), the rough equivalent of “Valentine’s Day for single people” and the biggest online shopping day of the year in China.

1 Big Tree Capital LLC, as of September 30, 2014

Carefully consider the Fund's investment objectives, risk factors, charges and expenses before investing. This and additional information can be found in the Fund's prospectus, which may be obtained by visiting www.emqqetf.com. Read the prospectus carefully before investing.

Investing involves risk, including the possible loss of principal. Investments in smaller and mid-sized companies typically exhibit higher volatility. The fund is non-diversified. International investing may involve risk of capital loss from unfavorable fluctuations in currency values, from differences in generally accepted accounting principles, or from economic or political instability in other nations. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. Frontier markets generally have less developed capital markets than traditional emerging market countries, and, consequently, the risks of investing in foreign securities are magnified in such countries. These countries are subject to potentially significant political, social and economic instability, which could materially and adversely affect the companies in which the Fund may invest. The Fund invests in the securities of Internet Companies, including Internet services companies and internet retailers, and is subject to risk that market or economic factors impacting technology companies and companies that rely heavily on technology advances could have a major effect on the value of the Fund’s investments.

Exchange Traded Concepts, LLC serves as the investment advisor, and Penserra Capital Management LLC serves as a sub advisor to the fund. The Funds are distributed by SEI Investments Distribution Co. (1 Freedom Valley Drive, Oaks, PA, 19456), which is not affiliated with Exchange Traded Concepts, LLC or any of its affiliates.