Emerging Global Advisors (EGA), an emerging markets (EM) asset manager that employs a disciplined, rules-based investment process rooted in research and portfolio strategy, today announced the release of “Developing Affluence”, a new commentary by EGA’s investment strategy team that details the rise and long-term growth drivers of the EM consumer investment theme.
“As emerging markets continue to shift from a growth model based on exports to one based on domestic demand, we believe that capitalizing on the emerging market consumer trend should be central to most emerging market investment strategies,” said Nicholas Smithie, EGA's Chief Investment Strategist. “Based on EGA’s calculations, the quantum of EM consumption surpassed $11 trillion last year, with growth accelerating from 2003 onwards. Supported by McKinsey & Co.’s forecast that consumption in emerging markets will reach $30 trillion by 2025, we recognize the rise of the EM consumer as an investment theme that will endure over the long term."1
Highlights from the commentary include:
- Key drivers of growth and consumption in emerging markets – Increasing wealth, favorable demographic trends, productivity gains and credit growth.
- Government reforms as a catalyst for additional growth – India, Mexico, Indonesia, and China in particular have turned to reforms to invigorate domestic demand and eliminate inefficiencies.
- The EM consumption roadmap – How the types of goods an emerging market consumer demands changes as incomes rise; consumption follows a hierarchy from non-durable to durable goods and through a wide range of discretionary goods.
- Analysis of fundamentals – EM consumer sectors have generally higher quality fundamentals relative to the broader EM equity index.
EGA’s strategy team maintains that investors should focus on buying EM consumer companies in the least developed economies, as well as those EM companies geared towards domestic demand, rather than external demand through exports. Investors should look for stocks in the discretionary sector in countries where the consumption of staples has been satisfied, but consumption of durable goods has not. The team believes this opportunity exists principally in Brazil, China, Colombia, Egypt, India, Indonesia, Malaysia, Mexico, Peru, Philippines, South Africa, Thailand and Turkey.
To enable investors to access the EM consumer theme, EGA offers the following exchange-traded funds (ETFs):
- EGShares Emerging Markets Consumer ETF (ECON)
- EGShares Emerging Markets Domestic Demand ETF (EMDD)
- EGShares India Consumer ETF (INCO)
Investors can access Developing Affluence – the Emerging Market Consumer Opportunity at http://www.emergingglobaladvisors.com/emergingperspectives/article.php?url_key=developing-affluence
About Emerging Global Advisors (EGA)
Emerging Global Advisors (EGA) is an emerging markets asset manager that employs a disciplined, rules-based investment process rooted in research and portfolio strategy. Our investment strategies, including our EGShares suite of ETFs, are designed to generate alpha in emerging and frontier markets through investment insight, a rules-based investment process and implementation experience. We offer core equity, thematic and equity income emerging and frontier market exposures. For more information, please visit emergingglobaladvisors.com.
Investors should carefully consider the investment objectives, risks, charges and expenses of a Fund before investing. To obtain a prospectus containing this and other important information, please call (888) 800-4347 or visit www.egshares.com to view or download a prospectus online. Read the prospectus carefully before investing.
Emerging market investments involve risk of capital loss from fluctuation in currency values, differences in accepted accounting principles, economic or political instability or increased volatility and lower trading volume. These Funds are non-diversified and, as a result, may have greater volatility than diversified funds. These Funds will concentrate its investment in issuers of one or more particular industries to the same extent that the underlying index. Concentration risk results from maintaining exposure to issuers conducting business in a specific industry. In certain circumstances, the Funds might not be able to dispose of certain holdings quickly or at prices that represent true market value preventing them from tracking the underlying index. As an ETF, Fund shares are not individually redeemable securities. There is no assurance that an active trading market for Fund shares will develop or be maintained. Diversification does not guarantee profit or protect against loss.
Small-cap and mid-cap companies generally will have greater volatility in price than the stocks of large companies due to limited product lines or resources, or a dependency upon a particular market niche.
EGA and EGShares Funds (“Funds”) are distributed by ALPS Distributors, Inc. Emerging Global Advisors and ALPS Distributors, Inc. are unaffiliated entities. Nicholas Smithie is a registered representative of ALPS Distributors, Inc.
© 2015 Emerging Global Advisors, LLC. All rights reserved. EGASM, EGSharesSM and EGAISM are service marks of Emerging Global Advisors, LLC. All other trademarks, service marks or registered trademarks are the property of their respective owners.
EGS002244 | Expires 1/1/2016
1 EGA Investment Strategy Commentary, “Developing Affluence: The Emerging Market Consumer Opportunity”, 12/2014.