EMQQ: Will The Next Internet Revolution Come From Emerging Markets? (Podcast)

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Summary

  • EMQQ founder Kevin Carter believes emerging market internet companies provide the "greatest growth opportunity of our lifetime."
  • Starting out as a classic value investor, Carter's initial pivot to high-octane EM tech growth names saw him promoting already existing ETFs like ECON to friends and colleagues.
  • Not satisfied with the makeup of these funds, he ultimately decided to construct his own highly targeted EM Internet & Ecommerce ETF, in the form of the now $400M EMQQ.

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By Jonathan Liss

Starting out as a classic value investor ala Graham and Buffett, EMQQ founder Kevin Carter had a revelation after the unwinding of the late 1990s tech bubble that emerging markets were going to be at the forefront of the next massive wave of internet growth. As Carter puts it, "You have billions of people just starting to go online, changing their consumer behavior... this is the greatest investing opportunity of our lifetimes." As a result of his revelation, Carter gradually made the shift from traditional value investing to high-octane emerging markets internet growth.

At first, he recommended funds like the Columbia Emerging Markets Consumer ETF (ECON) to friends and colleagues, believing it to be the best fund available to capture this growth. But then about 7 years ago, Carter had a second revelation: The best fund to capture emerging markets internet growth doesn't yet exist. Teaming up with his friend Dr. Burton Malkiel of "A Random Walk Down Wall Street" fame, he decided to form an index committee to create a pure-play index and accompanying ETF, the Emerging Markets Internet & Ecommerce ETF (NYSEARCA:EMQQ). The fund launched in 2014, gathering more than $400M in AUM over the past 5-plus years.

Show Notes

  • 1:45 - How did you get started in investing generally and in ETFs specifically?
  • 14:00 - Why the pivot to emerging markets?
  • 25:45 - Changing habits of consumption in emerging markets.
  • 27:15 - Why is now the time to invest in emerging market technologies?
  • 35:45 - How do you address concerns of EMQQ being too heavily weighted towards China?
  • 40:30 - Why does EMQQ have an 8% weighting cap, and a limit to US-listed companies and ADRs?
  • 44:15 - Digging in EMQQ's holdings: Alibaba (BABA), Tencent (OTCPK:TCEHY), Pinduoduo (NASDAQ:PDD), StoneCo (NASDAQ:STNE), Yandex (NASDAQ:YNDX), Jumia Technologies (NYSE:JMIA).
  • 54:45 - Future plans for EMQQ.

This article was written by

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Let’s Talk ETFs is Seeking Alpha's podcast dedicated to the exchange traded fund space. Hosted by Seeking Alpha’s ETF expert, Jonathan Liss, the podcast features long-form conversations with industry insiders, ETF issuers, asset managers and investment advisers to explore the ways in which ETFs continue to evolve, helping investors to reach their financial goals.
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Disclosure: I am/we are long EMQQ, PDD, STNE, YNDX, JMIA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Kevin Carter is long EMQQ, PDD, STNE, YNDX and JMIA.

Jonathan Liss doesn't have positions in any of the stocks or funds mentioned in today's show.

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