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TigerShares Launches First U.S. Listed ETF:TTTN

Zacks Equity Research
This new ETF concentrates on the top 10 Internet giants of both Washington and Beijing.

Global e-commerce and Internet on the whole is majorly controlled by market players belonging to the UnitedStates and China, two biggest economies of the world. To capitalize on the same, TigerShares has launched a unique Internet-based ETF, TigerShares China-U.S. Internet Titans ETF TTTN that brings together the Internet giants of these two countries (see: all the Technology ETFs here).

Inside TTTN

The fund tracks the Nasdaq China US Internet Tiger Index. It comprises 20 holdings with Alphabet GOOG (8.12%), Amazon AMZN (8.01), Alibaba Group Holding Ltd BABA (7.81%), Facebook FB (7.82%) and Tencent Holdings TCEHY (7.54%) occupying top five positions. The fund will be quarterly rebalanced and reconstituted to capture the upward trending securities (read: Alibaba Beats on Earnings, Lowers Guidance: ETFs in Focus).

Sector wise, Communication (56%) and Consumer, and Cyclical (26%) have a double-digit allocation each.  Individually, the United States and China have 53.4% and 46% allocation, respectively.

Since its inception on Nov 6, the fund has amassed $2.5 million and an expense ratio of 0.59%.

How Does It Fit Into a Portfolio?

Per research firm Gartner, global IT spending would increase by 3.2% next year as compared to 4.5% growth estimated for the ongoing year. Amount wise, the estimate totals $3.8 trillion for next year, up from $3.7 trillion in 2018 and IT services is expected to be a major contributor, likely to touch the $1 trillion mark next year — 4.7% increase from 2018 compared with 5.9% growth forecast for 2018. This data in itself points at the hot technology space. Therefore, it is prudent to have investments in the titans of Internet business (read: Is a Split Congress Good for the Market? ETFs in Focus).

TigerShares CEO Yang Xu said in the press release that most successful tech giants benefit by first mover’s advantage and greater economies of scale to enjoy brand dominance across various high growth segments worldwide. He added that Washington and Beijing will see the most successful market participants in the coming decades.

Chinese Academy of Cyberspace Studies said in its second annual World Internet Development Report that the United States leads the world in terms of Internet development followed by Beijing. U.S.-Sino was in the top two positions even last year in fields of infrastructure, innovation capabilities, industry development, Internet application, cyber security and Internet governance.

Per the report, China is a world leader when it comes to various applications of Internet like time spent on social media, online shopping and number of online users, while the United States leads in innovation, industry development and security. There are nearly 802 million active Internet users in Beijing in comparison to 300 million in Washington.

Competition

There is no direct competition to this fund as it is a novel concept. However, the fund will experience competition from the following ETFs focusing majorly on the United States: First Trust Dow Jones Internet Index FDN, Invesco NASDAQ Internet ETF PNQI, Global X Internet of Things Thematic ETF SNSR, SPDR S&P Internet ETF XWEB and O’Shares Global Internet Giants ETF OGIG. FDN (0.53%), XWEB (0.35%) and OGIG (0.48%) have lower expense ratios.

Threats from China-centric ETFs will come from KraneShares CSI China Internet ETF KWEB and Emerging Markets Internet & Ecommerce ETF EMQQ each having higher expense ratios of 0.70% and 0.86%, respectively.

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