EMQQ Global, the team behind the EMQQ Emerging Markets Internet and Ecommerce ETF (EMQQ US), a $1.4bn emerging markets fund focused on internet and e-commerce stocks, has launched a new ETF targeting companies leading the digitalization of India.
Kevin T. Carter, Founder and CIO of EMQQ Global.
The India Internet and Ecommerce ETF (INQQ US) has been listed on NYSE Arca with an expense ratio of 0.86%.
India is the third-largest emerging market and the fastest-growing major economy globally – KPMG expects the country’s GDP to expand by 7.7% in 2023.
With India being home to more than a quarter (27%) of the world’s Generation Z population, a middle class set to double by 2030, and 25 million new smartphone users added every quarter, analysts forecast that the South Asian nation is poised to enter a golden age of digitalization.
Kevin T. Carter, Founder and Chief Investment Officer at EMQQ Global, said: “India is an extraordinary investment opportunity and a central part of the e-commerce and digitalization growth story in emerging and frontier markets beyond China. You can think of this opportunity as ‘the next billion’ as India’s population gets affordable access to the internet for the first time via smartphones, changing the way people shop for food and clothing, access entertainment, do their banking, learn, and more.”
“In addition to the entrepreneurs and the technology that is being created and introduced in India, there is major support from the Indian Government. India’s President Modi introduced the ‘Digital India’ campaign in 2015 with the aim to have a trillion-dollar online economy by 2025 and improve the infrastructure needed to digitally empower the country.”
Methodology
The ETF seeks to tap into the rise of the Indian digital consumer by tracking the India Internet and Ecommerce Index. The index selects its constituents from a universe of Indian stocks, including American Depository Receipts, with market capitalizations greater than $300m and average daily trading volumes of at least $1m.
The methodology screens for companies that derive at least half of their profits, revenues, or assets from internet and e-commerce activities. Qualifying activities encompass themes such as internet services, internet retail, internet broadcasting, internet media, online advertising, online travel, online gaming, search engines, and social networks.
Securities that meet these criteria are selected to form the index and weighted by float-adjusted market capitalization subject to an individual security cap of 8% and an aggregate cap of 50% for stocks representing 5% or more. The index is reconstituted and rebalanced on a semi-annual basis.
As of 6 April, the index had significant exposure to e-commerce (25.7%), fintech (25.0%), e-ticketing (16.0%), adtech (11.3%), and communications software (7.7%) industries.
Approximately 85% of the index weight was allocated to stocks classified as mid-cap. Notable positions included Reliance Industries (8.0%), Info Edge India (8.0%), Indian Railway Catering & Tourism (8.0%), MakeMyTrip (8.0%), Tanla Platforms (6.5%), One 97 Communications (5.6%), and FSN E-Commerce Ventures (5.3%).
The ETF represents the third launch from EMQQ Global with the firm also offering the Next Frontier Internet & Ecommerce ETF (FMQQ US) which invests across emerging markets internet & e-commerce stocks while excluding those listed in China.
EMQQ and FMQQ also come with expense ratios of 0.86%.