ETFdb Logo
ETFdb Logo
  • ETF Database
  • Channels
    • Active ETF
    • Beyond Basic Beta
    • China Insights
    • Climate Insights
    • Commodities
    • Core Strategies
    • Crypto
    • Direct Indexing
    • Disruptive Technology
    • Energy Infrastructure
    • ETF Building Blocks
    • ETF Education
    • ETF Strategist
    • Financial Literacy
    • Fixed Income
    • Gold/Silver/Critical Minerals
    • Innovative ETFs
    • Institutional Income Strategies
    • Leveraged & Inverse
    • Managed Futures
    • Market Insights
    • Modern Alpha
    • Multifactor
    • Night Effect
    • Portfolio Strategies
    • Responsible Investing
    • Retirement Income
    • Richard Bernstein Advisors
    • Tax Efficient Income
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
  • Research
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF of the Week Podcast
    • ETF Prime Podcast
    • Video
  • Company
    • About VettaFi
    • Get VettaFi’ed
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. Emerging Markets Channel
  2. Earnings Anomaly Could Be Good for Emerging Markets ETF
Emerging Markets Channel
Share

Earnings Anomaly Could Be Good for Emerging Markets ETF

Tom LydonMay 16, 2022
2022-05-16

There are times when an index’s underlying earnings growth lags its price performance, and as experienced investors know, that scenario can and does materialize with growth stock benchmarks.

Investors seeking a more favorable setup on this front may want to consider emerging markets growth exchange traded funds such as the Emerging Markets Internet & Ecommerce ETF (EMQQ C+).

“There’s been a growing gap between the underlying earnings growth of the EMQQ Index versus its performance. The same is true for the Nasdaq 100 Index, but in this case, performance has swelled well ahead of its earnings growth,” noted EMQQ Global.

Be it by way of China’s 2021 regulatory crackdown on consumer internet companies or global investors simply not fully appreciating the potential offered by emerging markets internet companies, multiples on many EMQQ member firms have been declining for several years, indicating that the fund trades at notable discounts to U.S.-focused equivalents while offering as much, if not more, growth potential.

“Whereas we’ve seen years of multiples appreciations for US-based tech companies, the exact opposite is true for companies in the EMQQ universe. Multiple across the EMQQ Index have compressed aggressively over the last year, putting valuations in a much better place relative to other global tech-heavy gauges,” added EMQQ Global.

Of course, valuation alone isn’t a reason to buy or sell a stock or ETF. Expensive stocks can remain that way for extended periods while generating impressive returns along the way. Conversely, cheap stocks can remain cheap for a while, subjecting investors to disappointing returns in the process.

In other words, catalysts are often needed to elevate the performances of undervalued names. Some EMQQ holdings have potential sparks. Consider the fund’s Latin America exposure and that region’s burgeoning fintech economy.

“Latin Americans use crypto to send remittances – there’s already a high volume between Colombia and Venezuela – or to save up regardless of currency devaluation. A recent survey showed that crypto adoption is expected to have a triple-digit increase in the region’s largest markets: Brazil, Mexico, and Colombia –and MercadoLibre, which operates in these and other 15 countries, is getting ready for it,” said EMQQ Global.

MercadoLibre (NASDAQ:MELI) is a top 10 holding in EMQQ, and Argentina and Brazil, Latin America’s largest economy, combine for about 11% of the fund’s geographic exposure.

For more news, information, and strategy, visit our Emerging Markets Channel.

Loading Articles...
Our Sites
  • VettaFi
  • Advisor Perspectives
  • ETF Trends
Tools
  • ETF Screener
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Database Pro
More Tools
  • Financial Advisor & RIA Center
Explore ETFs
  • ETF News
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Information
  • Contact Us
  • Terms of Use and Privacy Policy
  • © 2023 VettaFi LLC. All rights reserved.

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X