Frontier Markets Monthly Report | April

26 April 2022

Frontier Markets ETF Monthly Report: Key Takeaways

  • The FMQQ Index declined 4% in March, taking its YTD performance -27%. While most of the negative return for the month and year can attributed to concerns around long-duration growth stocks, the actual growth part of the story remains intact (as discussed below). Meanwhile valuations continue to self-correct to levels long-term investors may begin to find quite appealing. 
  • The team travelled down to Latin America in March to meet several of our companies as well as get a better feel for the business environment on the ground. In totality, the trip spanned several countries, including Argentina, Brazil, Colombia, Mexico and Uruguay, all markets where our companies operate. 
  • Perhaps the most important takeaway is that the digital story in the region is still in very early stages relative to both the US and China. As more countries reach “internet critical mass” of around 75-100 million users we anticipate FMQQ businesses in the region to achieve the same scale benefits of those from the first and second wave of companies in America and China respectively. [1]
  • While taking a longer-term view is understandably difficult in what has been a very noisy year for markets, travelling to the region and seeing our companies and their operations in person has helped further sure up confidence in the structural growth story of FMQQ. Please note that all performance figures are showing net data. 

Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product.



Macro Outlook

While performance dipped aggressively in the first quarter of 2022, the underlying fundamentals remain intact. Several companies within the Index now trade at valuation levels below where they did at the onset of the pandemic in 2020. 

  • After a series of Q4 reports, overall FMQQ sales grew over 46% in 2021. [2]
  • Revenues are projected to growth another 31% in 2022. [3]
  • The Revenue PEG for 2022 continues to trade comfortably below 1.  

While valuations continued to normalize in March, the underlying growth of the top companies in the Index continued to exhibit strong momentum in their recent quarterly earnings reports. Below are the highlights of a select few that reported:

  • Mercadolibre: The largest e-commerce platform in Latin America saw its sales increase 75% on an FX neutral basis with gross margins up over 300bps year over year. Active users climbed 11% to 82 million, which remains a small fraction of the 652 people living in the region. [4] 
  • Nubank: The world’s largest digital bank, which counts Brazil as its home base. Sales increased 224% on an FX neutral basis. The company added nearly 6 million new users during the quarter and their total customer count jumped to 53.9M. [5]
  • Sea Limited: Leading super app in SE Asia saw its sales for quarter more than double, up 106%, driven by strength across strength across all three of their operating units: gaming, e-commerce and fintech. [6]


 Frontier Markets ETF Performance (As of 31.03.2022)










FMQQ Next Frontier Internet & Ecommerce ESG-S UCITS ETF









FMQQ Next Frontier Internet & Ecommerce Index









Performance before inception is based on back tested data. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in this product. Source: Bloomberg / HANetf. Data as of 31/03/22. Please note that all performance figures are showing net data.


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