Kevin O'Leary Targets Global Internet Giants

07/16/2018 5:00 am EST

Focus: ETFS

Jim Woods

Editor, Successful Investing, Intelligence Report

O’Shares Global Internet Giants ETF (OGIG) is the newest addition to O’Shares’ growing list of ETFs that are focused on long-term wealth management, asserts Jim Woods, fund expert and editor of Successful Investing.

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.

To tap the opportunity, 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 United States, as opposed to overseas, since these were the companies that stood to gain the most.

With the explosion of advancements in e-commerce and internet technology, O’Shares rolled out OGIG on June 5, 2018, and it 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. It also measures growth primarily by revenue growth rate.

OGIG screens the 1,000 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 more than 21% of the $5.6 trillion in total retail sales. Furthermore, in the last three years, e-commerce in China has grown over 145%.

After its inception, OGIG’s share prices soon hit a high of $26 before retreating to the $24 level.  Keep in mind that OGIG only has been in 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 lately due to the possibility of a trade war. The fund has an expense ratio of 0.48%.

From a sector perspective, OGIG is 74% invested in information technology and 25% in consumer discretionary. As far as country exposure goes, some of the biggest are the United States, 55%; China, 31%; and the United Kingdom, 5%.

For investors who are looking to hold a stake in the growing internet technology and e-commerce sectors, consider buying shares in O’Shares Global Internet Giants ETF.

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