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Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker, financial journalist, and money manager.

Starting this week, we will feature a series of rule-based exchange-traded funds (ETFs) that are managed by O‘Shares Investments. Today’s fund, O’Shares Global Internet Giants ETF (OGIG), is the newest addition to O’Shares’ growing list of ETFs that are focused on quality long-term wealth management. All of the O’Shares ETFs are listed on the New York Stock Exchange and can be easily located using their respective tickers.

O’Shares Chairman Kevin O’Leary shared an example of the rule-based active management at work at O’Shares. When the Trump tax cuts took place, O’Shares management took advantage by rebalancing holdings towards a heavier allocation in strongly profitable small-cap companies that had the majority of their revenues in the U.S. as opposed to overseas, since these were the companies that stood to gain the most.

With the explosion in advancements in e-commerce and internet technology, O’Shares’ rolling out of OGIG on June 5, 2018 could hardly have come at a more appealing time. OGIG’s focus is on internet-related companies that exhibit certain growth and quality characteristics. More specifically, the fund measures quality using a monthly “cash burn rate”, or how much investor capital is spent per month, and growth primarily by revenue growth rate. OGIG screens the 1000 largest U.S.-listed companies, the 500 largest European companies, the 500 largest Pacific basin companies and the 500 largest emerging-market companies for stocks that best match the aforementioned quality and growth characteristics.

As part of its investment strategy, OGIG believes in the potential of the Chinese internet companies. In a recently released report, O’Shares revealed that E-commerce sales in China hit $1.1 trillion in 2017, which represents over 21% of the $5.6 trillion in total retail sales. Furthermore, in the last three years, e-commerce in China has grown over 145%.

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After its inception, OGIG’s share prices soon hit a high of $26 before retreating to the $24 level.  Keep in mind that OGIG has only been existence for less than a month, so looking solely at the numbers can be misleading, especially since technology and e-commerce companies have come under pressure as of late due to the possibility of a trade war. The fund has an expense ratio of 0.48%

Top holdings for OGIG are: Facebook, 6.41%; Amazon.com, 6.24%; Alphabet, 6.18%; Tencent Holdings, 5.71%; and Alibaba Group Holdings, 5.65%.

From a sector view, OGIG is 74% invested in information technology and 25% in consumer discretionary. For a breakdown by country exposure, the top ones include the United States – 55%, China – 31% and the United Kingdom – 5%.

For investors looking to hold a stake in the growing internet technology and e-commerce sectors, consider looking into O’Shares Global Internet Giants ETF (OGIG).

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

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