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Market Welcomes Alibaba First Guidance: ETFs to Ride On
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Before yesterday’s opening bell, Chinese e-commerce giant Alibaba Group (BABA - Free Report) provided its first annual guidance after going public in 2014. The projections alleviated concerns over the company’s growth prospects amid China’s economic slowdown and intensifying competition from rivals such as JD.com (JD - Free Report) and Baidu (BIDU - Free Report) .
Alibaba expects fiscal 2017 revenues to grow at least 48% this fiscal year (ending March 2017) and its transaction volume to almost double to 6 trillion yuan ($912 billion) in fiscal 2020 from 3.09 trillion yuan in fiscal 2016. Additionally, chairman Jack Ma expects to reach 2 billion customers by 2036, up from 423 million in fiscal 2016 (read: Investors Cheer Alibaba Revenue Growth: ETFs in Focus).
Most of this growth will come from mergers and acquisitions that the company has undergone over the past one year. Further, the company is expanding its business beyond e-commerce and seeking to tap the unpenetrated rural markets, explore business abroad and invest in new sources of income from online media to cloud computing.
Market Impact
Investors welcomed Alibaba’s first guidance and shares of BABA climbed as much as 4% on the day. Meanwhile, the stock crushed its average daily volume, as nearly 22.3 million shares moved hands compared with just 14.8 million on average.
Given this, investors could easily play the upcoming growth in a basket form through ETFs. We have highlighted ETFs having the highest allocation to this Chinese e-commerce giant that will be in focus in the days ahead.
BLDRS Emerging Markets 50 ADR Index Fund
The product offers exposure to 52 emerging market-based depositary receipts by tracking the BNY Mellon Emerging Markets 50 ADR Index. About 39.4% of the portfolio is allotted to Chinese firms with Alibaba occupying the second position at 10.7%. Brazil, Taiwan and India round off the next three spots in terms of country exposure. From a sector look, information technology accounts for 37.2% share, followed by telecom (16.2%) and financials (14.9%). ADRE has amassed $117 million in its asset base while trades in a light volume of about 11,000 shares. It charges 30 bps in fees per year and has a Zacks ETF Rank of 3 or ‘Hold’ rating with a Medium risk outlook (read: Emerging Market ETFs--Value Play or Value Trap?).
This product provides exposure to the largest and most liquid companies that are domiciled outside the U.S. by tracking the IPOX International Index. Holding 50 stocks in its basket, Alibaba occupies the top position with 10.5% allocation. About one-fourth of the portfolio is skewed toward Japanese firms while Chinese and German firms round off the next two spots. From a sector look, financials takes the largest share at 45.2%, closely followed by information technology, consumer discretionary and industrials. The product has been able to manage $1.3 million in its asset base and charges 70 bps in fees per year. Volume is light exchanging 30,000 shares in hand on average. It has a Zacks ETF Rank of 4 or ‘Sell’ rating.
Guggenheim BRIC ETF
This product provides exposure to BRIC countries and follows the BNY Mellon BRIC Select DR Index. In total, it holds 105 stocks with Alibaba at the top position, accounting for 10.5% of assets. More than one-fourth of the portfolio is dominated by information technology while energy, financials and telecom services round off to next three spots with a double-digit exposure each. The ETF has $84.4 million in AUM and sees paltry volume of more than 8,000 shares. Expense ratio came in at 0.64%. The fund has a Zacks ETF Rank of 3 with a Medium risk outlook.
This ETF follows the Renaissance IPO Index, which holds the largest and most-liquid newly listed U.S. initial public offerings. Currently, the product holds 64 securities and BABA takes the top spot in the basket with 10.0% of assets. From a sector look, technology stocks make up for 30% share while financials and healthcare make up for a double-digit exposure each. The fund has attracted $13.6 million in its asset base and sees a paltry volume of about 4,000 shares per day on average. It charges 60 bps in fees per year (read: Should You Buy IPO ETFs on Busy Activity?).
This product provides concentrated exposure to the Chinese Internet market by tracking the CSI China Overseas Internet Index. In total, the fund holds 37 securities in its basket with Alibaba occupying the second position at 9.6%. The technology sector makes up for a substantial 61.8% of total assets, while consumer discretionary takes the remainder with just 1.4% allotted to industrials. The ETF has amassed $118.7 million in its asset base and charges 71 bps in annual fees. Volume is good as it exchanges 127,000 shares in hand per day (see: Volatility Abates in Chinese Stocks; Time to Buy These ETFs?).
SPDR S&P BRIC 40 ETF
This ETF tracks BRIC nations with the help of S&P BRIC 40 Index. Holding 44 stocks in its basket, Alibaba occupies the second position with 9.2% share. Here, financials and information technology are the top two sectors accounting for 38% and 31.2%, respectively. The fund has accumulated $68.2 million in its asset base and trades in volume of around 13,000 shares. It charges 0.49% in expense ratio and has a Zacks ETF Rank of 4 with a Medium risk outlook.
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Market Welcomes Alibaba First Guidance: ETFs to Ride On
Before yesterday’s opening bell, Chinese e-commerce giant Alibaba Group (BABA - Free Report) provided its first annual guidance after going public in 2014. The projections alleviated concerns over the company’s growth prospects amid China’s economic slowdown and intensifying competition from rivals such as JD.com (JD - Free Report) and Baidu (BIDU - Free Report) .
Alibaba expects fiscal 2017 revenues to grow at least 48% this fiscal year (ending March 2017) and its transaction volume to almost double to 6 trillion yuan ($912 billion) in fiscal 2020 from 3.09 trillion yuan in fiscal 2016. Additionally, chairman Jack Ma expects to reach 2 billion customers by 2036, up from 423 million in fiscal 2016 (read: Investors Cheer Alibaba Revenue Growth: ETFs in Focus).
Most of this growth will come from mergers and acquisitions that the company has undergone over the past one year. Further, the company is expanding its business beyond e-commerce and seeking to tap the unpenetrated rural markets, explore business abroad and invest in new sources of income from online media to cloud computing.
Market Impact
Investors welcomed Alibaba’s first guidance and shares of BABA climbed as much as 4% on the day. Meanwhile, the stock crushed its average daily volume, as nearly 22.3 million shares moved hands compared with just 14.8 million on average.
Given this, investors could easily play the upcoming growth in a basket form through ETFs. We have highlighted ETFs having the highest allocation to this Chinese e-commerce giant that will be in focus in the days ahead.
BLDRS Emerging Markets 50 ADR Index Fund
The product offers exposure to 52 emerging market-based depositary receipts by tracking the BNY Mellon Emerging Markets 50 ADR Index. About 39.4% of the portfolio is allotted to Chinese firms with Alibaba occupying the second position at 10.7%. Brazil, Taiwan and India round off the next three spots in terms of country exposure. From a sector look, information technology accounts for 37.2% share, followed by telecom (16.2%) and financials (14.9%). ADRE has amassed $117 million in its asset base while trades in a light volume of about 11,000 shares. It charges 30 bps in fees per year and has a Zacks ETF Rank of 3 or ‘Hold’ rating with a Medium risk outlook (read: Emerging Market ETFs--Value Play or Value Trap?).
First Trust International IPO ETF (FPXI - Free Report)
This product provides exposure to the largest and most liquid companies that are domiciled outside the U.S. by tracking the IPOX International Index. Holding 50 stocks in its basket, Alibaba occupies the top position with 10.5% allocation. About one-fourth of the portfolio is skewed toward Japanese firms while Chinese and German firms round off the next two spots. From a sector look, financials takes the largest share at 45.2%, closely followed by information technology, consumer discretionary and industrials. The product has been able to manage $1.3 million in its asset base and charges 70 bps in fees per year. Volume is light exchanging 30,000 shares in hand on average. It has a Zacks ETF Rank of 4 or ‘Sell’ rating.
Guggenheim BRIC ETF
This product provides exposure to BRIC countries and follows the BNY Mellon BRIC Select DR Index. In total, it holds 105 stocks with Alibaba at the top position, accounting for 10.5% of assets. More than one-fourth of the portfolio is dominated by information technology while energy, financials and telecom services round off to next three spots with a double-digit exposure each. The ETF has $84.4 million in AUM and sees paltry volume of more than 8,000 shares. Expense ratio came in at 0.64%. The fund has a Zacks ETF Rank of 3 with a Medium risk outlook.
Renaissance IPO ETF (IPO - Free Report)
This ETF follows the Renaissance IPO Index, which holds the largest and most-liquid newly listed U.S. initial public offerings. Currently, the product holds 64 securities and BABA takes the top spot in the basket with 10.0% of assets. From a sector look, technology stocks make up for 30% share while financials and healthcare make up for a double-digit exposure each. The fund has attracted $13.6 million in its asset base and sees a paltry volume of about 4,000 shares per day on average. It charges 60 bps in fees per year (read: Should You Buy IPO ETFs on Busy Activity?).
KraneShares CSI China Internet Fund (KWEB - Free Report)
This product provides concentrated exposure to the Chinese Internet market by tracking the CSI China Overseas Internet Index. In total, the fund holds 37 securities in its basket with Alibaba occupying the second position at 9.6%. The technology sector makes up for a substantial 61.8% of total assets, while consumer discretionary takes the remainder with just 1.4% allotted to industrials. The ETF has amassed $118.7 million in its asset base and charges 71 bps in annual fees. Volume is good as it exchanges 127,000 shares in hand per day (see: Volatility Abates in Chinese Stocks; Time to Buy These ETFs?).
SPDR S&P BRIC 40 ETF
This ETF tracks BRIC nations with the help of S&P BRIC 40 Index. Holding 44 stocks in its basket, Alibaba occupies the second position with 9.2% share. Here, financials and information technology are the top two sectors accounting for 38% and 31.2%, respectively. The fund has accumulated $68.2 million in its asset base and trades in volume of around 13,000 shares. It charges 0.49% in expense ratio and has a Zacks ETF Rank of 4 with a Medium risk outlook.
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