Emerging markets currently represent about 70% of the world's
population, but only about 36% of the global GDP. However these
economies are growing much faster than the developed economies.
3 Consumer Staples ETFs for the Shaky Market)
By 2020, the combined GDP of emerging economies is projected
to overtake that of the developed economies. As these countries
grow, more people see rise in disposable incomes and spending
According to a
--by 2025, the consumption class in the emerging markets will
grow to 4.2 billion people and the consumption will reach $30
trillion--about half of the global total. As a result, the
emerging markets consumers will become dominant players on the
global economic scene.
The emerging markets consumer market also looks very
attractive due to positive demographic trends in these countries.
The median age in the emerging countries is much lower compared
with most developed countries and with growing incomes, many
people join the ranks of middle class every day. (Read:
Spending is Surging: Stock Up on These ETFs
Rapidly growing middle class in emerging markets will ensure
the growth of consumer focused companies in these regions.
Further many of the governments are also taking policy measures
to encourage domestic growth while seeking to reduce the
dependence on exports.
The investors can access these markets through a number of
, both multi-country and country-specific ones. The broad based
emerging market funds are typically dominated by large cap
multinational companies. On the other hand, there are some
emerging markets consumer ETFs designed specifically to benefit
from the rapid growth of the smaller, domestically focused
In this article we present the ETFs that provide broader
exposure to emerging markets consumers. (Read:
Buy These Emerging Asia ETFs to Beat China,
EGShares Emerging Markets Consumer ETF
ECON tracks the Dow Jones Emerging Markets Consumer Titans 30
Index, which measures the performance of 30 leading emerging
market companies in the Consumer Goods and Consumer Services
The fund made its debut in September 2010 and currently holds
$468.4 million in AUM, invested in 30 securities. It charges 85
basis points for annual expenses.
Top country weighting are South Africa (19%), Mexico (18%),
Brazil (17%) and India (11%). Beverages (16%), Food & Drug
Retailers (14%) and Food Producers (13%) occupy the top three
spots in terms of sector exposure.
Emerging markets consumers do prefer their familiar local and
regional brands in comparison to developed world brands. The
companies that this ETF invests in derive most of their revenues
from the emerging markets sales.
MSCI Emerging Markets Consumer Discretionary
EMDI tracks the MSCI Emerging Markets Consumer Discretionary
Index. Incorporated in February 2012, this ETF now has $2.5
million in assets, invested in 81 holdings.
The fund invests mostly in Consumer Discretionary stocks,
which currently comprise 99.8% of the fund. It is heavily tilted
towards South Korea (32%), while South Africa (18%), China (10%)
round out the top three. EMDI charges 69 basis points in expenses
EGShares Emerging Markets Domestic Demand ETF
EMDD, the latest product in this space, tracks the price and
yield performance of the INDXX Emerging Markets Domestic Demand
Index. The index is comprised of companies that are expected to
benefit most from the organic growth within emerging
Financials (25%), Technology (14%) and Energy (13%) are the
top sectors while Mexico (25%), China (15%) and India (14%)
occupy the top spots in terms of country exposure. The fund
charges 85 basis points in expenses per year.
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EMERG-GS DJ EMC (ECON): ETF Research Reports
EGS-EM DOM DMND (EMDD): ETF Research Reports
ISHARS-M EM CDS (EMDI): ETF Research Reports
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