Horizons ETFs has launched a new actively managed ETF in Canada targeting companies poised to benefit from the consumer growth story in emerging markets.

The ETF seeks to capture sub-themes linked to the rise of the emerging markets consumer.

The Horizons Emerging Markets Leaders ETF (HEMC CN) has been listed on Toronto Stock Exchange with a management fee of 0.75%.

Emerging market equities have presented an alluring opportunity to growth-oriented investors for decades.

Highlighting the potential of the segment, data from the World Bank shows that the average income across major developing countries increased by 270% between 2000 and 2018,  compared to just 180% in developed nations.

Consumer spending is also on the rise with McKinsey projecting consumer spending in emerging markets to reach $30 trillion by 2025, powered by tailwinds including population growth, ongoing industrialization, technological advancements, real income growth, wealth accumulation, and demographic changes.

HEMC seeks to tap into this growth by targeting sub-themes aligned with the rise of the emerging markets consumer. These sub-themes include consumer spending, technology, e-commerce, healthcare, retail credit, insurance, and leisure.

The ETF is sub-advised by the US division of Horizon’s parent company, Mirae Asset Global Investments, a global asset manager with roots in the Asia region.

Mirae will leverage its extensive network of regional offices and affiliates to manage the fund, harnessing the expertise of 13 portfolio managers covering 27 countries globally.

Eligible securities include common stocks, American Depository Receipts, and Global Depository Receipts, of companies that are either domiciled in emerging markets or considered to be significantly economically tied to emerging market economies.

Security selection is based on Mirae’s proprietary research into what it believes will be important long-term growth themes, identifying equities with exposure to those themes, and investing in a selection of companies with the most favourable valuations and risk/return profiles.

The fund may invest across any market capitalization tranches and industry sectors; however, it is expected to focus on segments expected to benefit the most from consumption-related growth trends. According to Mirae, the fund will likely exhibit tilts towards communication services, consumer discretionary, consumer staples, financials, healthcare, and information technology sectors.

Foreign currency exposure will generally not be hedged back into Canadian dollars.