Take Advantage of Demographic Trends with a Global Consumer ETF

Doug Fabian

Doug Fabian is known for his expert knowledge of ETFs, bear funds and enhanced index funds to profit in any market climate.

Emerging markets have had a difficult year, but an end to that trend could always be around the corner. When emerging markets do turn upward, they may well soar due to their greater likelihood of growth compared to stocks in more developed countries. One exchange-traded fund (ETF) that offers a way to tap such potential upside is EGShares Emerging Markets Consumer ETF (ECON).

The fund, along with other emerging market ETFs, is intended to profit as developing economies transition to more developed ones that are less dependent on exports. In addition, many emerging market economies are showing favorable trends, such as a growing middle class and labor force.

Consumption is expected to increase, in part, due to these changes. The ECON fund has holdings in 30 large consumer-oriented companies in arguably the most important emerging markets around the globe. The most-represented countries among its market-cap-weighted corporate holdings are South Africa, Mexico, Thailand and the BRIC countries of Brazil, Russia, India and China.

This fund has been punished along with other emerging-market investments as it fell 15.2% during the last 12 months. However, it has risen 3.2% so far in 2016, and perhaps could be on its way to a stronger performance.

ECON’s investment objective is to produce a total return by investing in the securities of the Dow Jones Emerging Markets Consumer Titans Index, which measures the stock performance of the 30 leading emerging market companies in the Consumer Goods and Consumer Services Industries, as defined by the Industry Classification Benchmark (ICB).

The fund’s expense ratio clocks in at 0.83%, which is possibly justified by the fact that investing in emerging markets tends to come with expensive barriers one way or another, but pays a 1.18% dividend. Net assets currently total $533 million, which makes the fund small but not obscure.

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ECON

Top holdings for ECON include Naspers Ltd., 10.31%; Fomento Economico Mexicano SAB, 5.67%; Ambev SA, 5.32%; Steinhoff International Holdings, 4.73%; and Wal-Mart de Mexico SAB de CV, 4.46%.

View the current price, volume, performance and top 10 holdings of ECON at ETFU.com.

If you’re looking for a way to invest in the consumer giants of the emerging market world, EGShares Emerging Markets Consumer ETF (ECON) is a fund that should pique your interest.

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful ETF Investing newsletter.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You just may see your question answered in a future ETF Talk.

 

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