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A Hidden Gem Among Internet ETFs

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Domestic internet equities are enjoying another stellar year, but their Chinese counterparts are impressing, too. For example, the TigerShares China-U.S. Internet Titans ETF (NasdaqGM: TTTN) – a hidden gem among internet ETFs – is higher by almost 34% this year.

The high-flying TTTN tracks the Nasdaq China US Internet Tiger Index. The index is split between the 10 largest US-based Internet companies and the 10 largest Chinese public Internet companies. Normally, the fund will invest at least 80% of its assets, exclusive of any collateral held from securities lending, in the components of the index, depositary receipts representing such components, and securities underlying depositary receipts in the index. The index is designed to track the performance of the 10 largest publicly-traded Chinese Internet companies and the 10 largest publicly-traded U.S. Internet companies.

Said another way, TTTN is a “best of both worlds” idea as it provides exposure to both Chinese and U.S. companies, a strategy rarely seen by funds in this category.

TTTN components include Google parent Alphabet Inc. (NASDAQ: GOOG), Facebook Inc. (NASDAQ: FB), Alibaba Group Holding Ltd. (NYSE: BABA) and Amazon.com Inc. (NASDAQ: AMZN).

Talking TTTN

Along with their U.S. counterparts, Asian technology giants and related ETFs could continue to outperform as the coronavirus pandemic forced many to rely on digital devices and services to stay connected.

Asian tech companies saw strong profit or revenue growth during the Covid-19 pandemic, which has kept many people at home, online—working, meeting, shopping, and playing games, the Wall Street Journal reports.

Analysts and investors argue that Asia’s tech surge has broadly followed the rally in major U.S. technology companies as both sides have similarly benefited from pandemic-related business closures and lockdowns. Translation: TTTN is highly relevant in today’s investment climate.

Bolstering the case for TTTN is that Asia tech companies are still cheaper than their U.S. peers, making them potentially more attractive after the run-up in U.S. valuations. For example, Alibaba has a forward price-to-earnings ratio of 27.7, compared to 85.4 for Amazon.com Inc.

Importantly, TTTN is also levered to trends in the two largest e-commerce markets in the world.

The benefits of e-commerce don’t just lend themselves to developed markets, but all markets around the globe are forcing to adapt amid the coronavirus pandemic. This puts exchange-traded fund (ETF) investors at an advantage to capitalize on eCommerce opportunities in certain funds.

For more on innovative portfolio ideas, visit our Nasdaq Portfolio Solutions Channel.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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