KARACHI: Dawn Global launched the Asian Growth Clubs Exchange Traded Fund (ETF) listed on the New York Stock Exchange (NYSE) on June 17, 2021. Cubs is the first active thematic ETF to focus on public equities in emerging and frontier growth markets.
Cubs offers investors actively managed exposure to five large, fast growing markets – Bangladesh, Indonesia, Pakistan, Philippines, and Vietnam. These five economies have individually grown GDP faster than 6% a year in USD since 2000, Bangladesh and Vietnam have compounded GDP for 40 consecutive years including 2021. Yet these markets remain inaccessible to most foreign investors due to little or no ETF coverage or American Deposit Receipt listings.
“Most emerging market investors focus in Asia on China and India, yet there is a compelling long-term secular growth story in five Asian countries with a combined population of more than 860m people, expected to grow to one billion by 2035, and with attractive demographics. The average age is 28 in these markets with a burgeoning middle class and accelerating digital adoption” said Maurits Pot, Founder and CEO of Dawn Global.
Dawn Global is re-inventing the conventional approach to emerging markets equities investing by positioning Cubs as an actively managed, content driven, thematically designed, regionally diversified ETF.
“The passive, index-driven emerging market ETF asset class is concentrated on six countries (the BRICs2 + Korea + Taiwan) overlooking the attractive and sizeable opportunity in the next generation of emerging and frontier growth markets. The index driven market-cap weighting approach risks skewing portfolio construction to current size, not future growth potential. Instead of grouping emerging markets into a single product, we intend to give investors the option of which specific markets they have exposure to, through regionally diversified products.”
Dawn Global believes active investment management is required to identify the most compelling growth companies in these nascent markets as well as to mitigate company and governance risk. The investment process involves top-down company screening and bottom-up company analysis to identify the most compelling investment opportunities. Cubs’ high conviction, diversified portfolio is reviewed quarterly and rebalanced twice a year, through equal weighting across all securities to mitigate single country and single company risk. The portfolio is geared towards tomorrow’s economy, with a bias towards Healthcare, Telecom Media Technology, Consumer Goods, and Financials.
Exchange Traded Concepts, an ETF platform provider, is the investment adviser and Kingsway Capital Partners Limited (KCPL) is the investment sub-advisor to the fund. Dawn Global is the sponsor to the fund and an appointed representative to KCPL. Foreside Fund Services LLC., a provider of investment management services, is the distributor of Cubs.
What is Dawn Global?
Dawn Global was founded by Maurits Pot. Maurits has been a public and private equity investment partner at Kingsway Capital, a leading emerging and frontier markets specialist with assets under management of more than $2 billion, where he has represented investors on the boards of several emerging market companies. Prior to this, Maurits worked in M&A at Goldman Sachs and at the commodity trader Vitol. Maurits earned a BA in Economics (Magna Cum Laude) from Middlebury College, Vermont. He works with three experienced analysts based in Asia who he has worked with for multiple years.
What is Pakistan’s position in the ETF?
Out of all the countries, Pakistan has the smallest weight. While speaking to Profit Maurits commented on the growth options and opportunities in Pakistan. He explained that the smallest weight in the ETF was given to Pakistan considering it’s is the smallest stock exchange in comparison to the other countries, has low liquidity and a small number of large liquid companies.