Developing Affluence The emerging market consumer opportunity

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1 EGA Investment Strategy Commentary Developing Affluence The emerging market consumer opportunity The rise of the emerging market consumer The emerging market (EM) consumer theme is not new and research on this long term trend suggests that it should endure. Based on our own calculations, the quantum of EM consumption surpassed $11 trillion last year, with growth accelerating from 2003 onwards. The consulting firm McKinsey & Co. 1 has called EM the $30 trillion decathlon, forecasting that by 2025, annual consumption in EM will reach $30 trillion, (nearly half of the global total) the biggest growth opportunity in the history of capitalism. At current trend rates of growth, emerging market consumption would surpass that of the U.S. by As such, we believe that harnessing the EM consumer trend should be central to most emerging market investment strategies. HIGHLIGHTS: Growth of the emerging market consumer has been a leading theme GDP growth is likely to continue and support increases in consumption and domestic demand We believe harnessing the EM consumer should be central to most emerging market investment strategies The drivers of growth and consumption Historically, growth and consumption in EM were supported by exports to developed economies. Looking ahead, as growth and demand in these developed markets begins to slow, EM economies will see their growth model shift from export-based to domestic demand-based. We believe that domestic sectors will benefit from this change as emerging market manufactured goods and services become increasingly consumed domestically rather than just exported. Factors that support this shift are: increasing wealth, favorable demographics trends, productivity gains and credit growth. Increasing wealth Per capita Gross Domestic Product (GDP), which we use as a measure of EM wealth, remains low (see Figure 1) relative to developed markets. We believe this points to the upside potential for EM, and a narrowing of the gap, in the long term. In support of this outcome, we note that EM per capita GDP growth rate has been five times that of developed markets from 2003 to 2013 (see Figure 2). The importance of rises in per capita GDP is shown in Figure 3, which reminds us that consumer demand (i.e. household consumption) grows with wealth. FIGURE 1: Per Capita GDP 2013, (constant 2005 US$) ,348 Emerging Markets 38,293 Developed Markets FIGURE 2: Per Capita GDP growth 10-year average % change, % Emerging Markets 0.9% Developed Markets FIGURE 3: Consumption increases with income: Most of the discretionary opportunity may be yet to come Economics 101: GDP Growth = Labor Force Growth + Productivity Growth Demographics and productivity remain the foundation of economic growth, which in turn drives domestic consumption. Emerging market growth has benefitted from both labor force growth (over one and a half times that of developed markets) and productivity growth 1 McKinsey, August 2012, Winning the $30 trillion Decathlon. 2 Ibid. EGA Investment Strategy Commentary 1

2 (over six times that of developed markets) (see Figure 4 and 5). Rapid labor force growth, supported by robust population growth, indicates growth through higher volume. Improvements in productivity should be rewarded with greater disposable income. Productivity gains can come from many sources, including: increased use of existing technologies, a more educated work force, infrastructure investment, structural reforms that both remove growth bottlenecks and alleviate market /government inefficiencies, and migrating employment from agriculture to the higher value-added manufacturing and service industries. In many cases, we believe these trends can persist. purchase real estate, appliances and technology that would otherwise have been unaffordable or difficult to purchase. In 2013, EM household debt penetration was only 27% of GDP, which was much lower than the 78% reported in developed economies where welldeveloped financial systems supported a sustained period of debtfuelled spending. Therefore, we believe there is an opportunity for emerging markets economies to take advantage of their increasing income and lower debt burden to increase consumption. FIGURE 6: Household debt as a % of GDP, 2013 FIGURE 4: Labor force growth 10 year average % change, 2012 Labor Force Growth 1.2% % 0.6% 0.4% 0.2% % Emerging Markets 0.7% Developed Markets Household Liabilities (% of 2013 GDP) % Emerging Markets Source: International Monetary Fund (IMF) World Economic Outlook, October 2014; EGA. 78% Developed Markets FIGURE 5: Labor productivity Annual %, 10-year average, 2012 Labor Productivity The role of credit 5.1% Emerging Markets 0.8% Developed Markets In addition to greater per capita wealth, lower interest rates further support the development of the emerging market consumption theme. Lower inflation, interest rates and debt burdens since the 1997 Asian crisis have made access to credit easier. Consumers can more easily obtain mortgages, consumer loans and credit cards to The Beat Goes On The outlook for more rapid economic growth in emerging markets continues. The IMF forecasts (see Figure 7) real annual GDP growth over the next six years ( ) for what they classify as the emerging market and developing economies at 5., over double the 2.3% for their forecast for the advanced economies. (see Figure 7) FIGURE 7: GDP Growth GDP (%), constant prices 1 8% 6% 4% 2% -2% -4% -6% e 2016e 2018e Emerging market and developing economies Source: IMF World Economic Outlook, October 2014; EGA. Advanced economies EGA Investment Strategy Commentary 2

3 Rapid emerging market GDP growth has caused a material increase in emerging market consumption. From , the emerging markets share of global consumption rose from 14% to 21% (see Figure 8). We believe this trend is likely to continue. Overall, emerging market consumers have increased their spending by over 40 over the last 20 years (see Figure 10). FIGURE 10: The rise of the emerging market consumer FIGURE 8: Emerging Market Consumption % of total world consumption Emerging Markets Consumption 25% 2 15% 1 5% Household final consumption ($bn) 12,000 10,000 8,000 6,000 4,000 2, The gap between emerging market and developed market consumption growth has become more pronounced (see Figure 9) over time. FIGURE 9: Consumption Growth 10-year average annual growth rate Consumption Growth 6% 5% 4% 3% 2% 1% Emerging Markets USA Developed Markets Reforms accelerate growth Although emerging market GDP growth remains well above developed markets levels, there are still concerns about the decline in its absolute growth rate since the financial crisis in 2008, as demand for commodities and exports of manufactured goods has since waned. The Chinese have been accustomed to growth rates of 1; today s growth is closer to 7.5%. Similarly, there has been a comparable decline in growth rates in many other emerging market economies. To improve growth, these governments have turned to reforms to invigorate domestic demand and eliminate inefficiencies. For example: India: The new Indian government, led by Prime Minister Narendra Modi, intends to privatize state assets, increase foreign direct investment and reduce the fiscal deficit by cutting subsidies. There are also plans to deregulate the labor market and upgrade infrastructure. These improvements should unleash investment, increase efficiency, raise productivity and boost growth. Mexico: President Peña Nieto s policies target the monopolies and oligopolies in the banking, telecoms and energy sectors. He has also raised taxes and government spending in order to encourage investment and growth. Indonesia: President Joko Widodo is tasked with reviving economic growth as well as reducing the country s twin budget and current account deficits. His agenda will likely include fewer energy subsidies, revival of the oil and gas sector and expansion of the manufacturing base. EGA Investment Strategy Commentary 3

4 China: With China, the path to greater consumption is less tied to its GDP growth (already high) and is more a function of shifting priorities. Historically, China has emphasized fixed asset investment and infrastructure development and 2013 consumption as a proportion of its GDP was only 34%. A successful shift towards a more consumption-led growth model, as directed in China s current Five Year Plan, 3 would unleash pent-up Chinese demand. Furthermore, China intends to make reforms to existing land and residence systems, deregulate interest rates and partially privatize state-owned enterprises (SOEs). These changes should improve capital allocation, profitability of private sector companies and aid in the transition to a consumption-driven economy. The consumption roadmap Household consumer products are typically split into two groups: durable goods and non-durable consumer goods. Durable goods are products that are purchased infrequently such as home appliances, home and office furnishings and consumer electronics. Non-durable goods, on the other hand, are perishable products such as food and beverages. There is a natural hierarchy, however: consumption of non-durables must first be satisfied before purchasing more expensive durable goods. A multitude of factors (demographics, climate, infrastructure, culture, inequality, regulatory trends, levels of income and technology, for example) are all apparent in determining shifts in consumption patterns. To determine the thresholds at which the consumption of non-durables moves in favor of durables, we examine food consumption against income levels (Figure 11). FIGURE 11: Daily food consumption versus GDP per capita (PPP) Feed us first In GDP per capita (PPP) terms, we observe that up to US$5,000 per capita, households predominantly focus on necessities such as food and beverages. Beyond this mark, food consumption is less sensitive to increases in income levels. Beyond US$12,000 GDP per capita, consumption of food is inelastic to changes in income levels. At this level, the focus on consumer spending swings heavily in favor of durables. Climbing the consumption ladder Within emerging market economies, household consumption accelerates after GDP per capita reaches US$12,000, following an S-curve (Figure 12). We place countries into three categories: Early phase. Much of the opportunity is yet to materialize in China, Egypt, India, Indonesia, Peru, Philippines, as per capita income is still below the US$12,000 threshold and the majority of income is spent on food. We believe China, India and Indonesia will become the most important consumer countries in the world due to their large populations. The sweet spot. Countries in the sweet spot where food consumption has been satisfied and consumption of durables is underway. These are: Brazil, Colombia, Chile, Hungary, Malaysia, Mexico, Poland, Russia, South Africa, Turkey and Thailand although Eastern Europe is fast approaching the point at which consumption growth begins to slow. Brazil is eminently important on account of its large population size. Maturity. At the affluent end of the spectrum, as GDP per capita exceed US$25,000, consumption growth slows. Adoption of many consumer discretionary goods has reached saturation. We see these traits in Greece and the Czech Republic. FIGURE 12: The consumption ladder Source: Food and Agriculture Organization, World Bank, EGA. Chart as of latest available data. Data is as of December 2014 and reflects the latest available data published by the World Bank. 4 3 Delegation of the European Union in China, Full Translation Five Year Plan , Part I, Chapter 4 Policy Direction. 4 Most recent data per country is as follows: Brazil (2012), China (2012), Germany (2012), Hungary (2011), India (2010), Japan (2004), Malaysia (2012), Mexico (2010), Peru (2012), Philippines (2012), Poland (2012), South Africa (2011), South Korea (2000), Taiwan (2012), Thailand (2010), Turkey (2012), U.S. (2011), United Kingdom (2010). EGA Investment Strategy Commentary 4

5 What are emerging market consumers buying? Discretionary consumer goods can be categorized into four main groups: technology, vehicles, household appliances and luxury goods. The consumption trends of each group and its sub-groups are diverse, so predicting future consumption patterns is complex. We analyze a selection of durable goods across the main consumer groups focusing on the mobile phone, the internet, passenger car, color television, personal computer, digital camera, refrigerator, washing machine and dishwasher. Next on the consumption ladder are the refrigerator and washing machine. Household ownership of these appliances reaches on average 5 at around US$10,000 GDP per capita, with saturation occurring close to the US$20,000 mark. The potential for an increase in ownership exists only at the very low income end of emerging markets India and Philippines, in particular. FIGURE 15: Household penetration of washing machines Our results show that GDP per capita is closely connected to rising consumption across the product range. Based on our findings: The mobile phone and television are adopted first and reach saturation at very low levels of income (around US$10,000 GDP per capita). The ownership pattern of these products is similar to the consumption of food; they have the same characteristics as basic goods. Other than technology upgrades, there are very few growth opportunities left in these products. FIGURE 13: Mobile phone consumption matures early Source: Penetration of Washing Machines reflects latest available data published by respective country s National Statistics. and GDP data from World Bank for the same period. 4 FIGURE 16: Household penetration of refrigerators FIGURE 14: Early adoption of the television Source: Penetration of Refrigerators reflects latest available data published by respective country s National Statistics. and GDP data from World Bank for the same period. 4 Source: Penetration of Televisions reflects latest available data published by respective country s National Statistics. and GDP data from World Bank for the same period. 4 EGA Investment Strategy Commentary 5

6 On average, one in every two households in emerging markets owns a personal computer and has internet access by the time per capita income reaches US$15,000. The internet is important for economic and social development. As more users gain access to the virtual world, online retail will continue to gain prominence in emerging markets. China is forecast to become the largest online shopping market in the world imminently, overtaking the U.S. 5 This shift should also prompt store-based retailers to embrace online sales. Penetration can still increase with rising levels of income in the low and middle-income emerging economies. The high end consumer products cars, digital cameras and dishwashers only gain traction at very high levels of income, often in excess of US$20,000. These products are largely under-penetrated across all emerging economies and represent the biggest opportunity as incomes rise. FIGURE 19: Penetration of cameras FIGURE 17: The internet adoption peters out past US$30,000 per head Source: Penetration of Cameras reflects latest available data published by respective country s National Statistics. and GDP data from World Bank for the same period. 4 FIGURE 20: Car adoption follows a traditional S-curve FIGURE 18: Penetration of computers Source: Penetration of Personal Computers reflects latest available data published by respective country s National Statistics. and GDP data from World Bank for the same period. 4 5 McKinsey Global Institute, China s e-tail revolution: Online shopping for growth, March 2013 EGA Investment Strategy Commentary 6

7 Total healthcare expenditure is the sum of both private and public components. The figure is usually low, even at levels of income where high end consumer goods gain traction. Indeed, expenditure on healthcare only accelerates once income exceeds US$30,000 per head, a level beyond all EM countries. Most of the opportunity in this segment is yet to come. FIGURE 21: Healthcare expenditure This demonstrates that there is still plenty of life left in the emerging market consumption theme, with under-penetration of basic household goods such as refrigerators and washing machines. Many have just started to consume high-end goods such as motor cars, digital cameras and dishwashers, suggesting a significant growth opportunity in the luxury segment. Luxury goods No study on the emerging market consumer is complete without a discussion of luxury goods. 6 According to consultancy firm Bain & Company, the luxury goods market was worth US$280 billion globally in 2013, with compound annual growth rate (CAGR) of 7% 9% in Emerging markets account for 3 of all global luxury sales. The largest consumers of luxury goods reside in developed economies, with the top two markets being the U.S. and Japan. Emerging markets are well poised to increase their share of luxury goods consumption worldwide as urbanization, economic development, rising incomes, reduction of duties on luxury imports and changing attitudes towards the display of wealth continue their current trends. Sources: World Bank - World Development Indicators, November 2014; EGA. In Figure 22, we summarize our findings and show the level of GDP per capita where each consumer product attains 5 ownership on average across all countries in our study. In short, it depicts the order in which consumers buy new products as incomes rise. For example, in India, the consumption of mobile phones and televisions is rampant while a rise in income is still required for consumption of refrigerators and washing machines to increase significantly. FIGURE 22: Who s buying what? Based on Deloitte s projections, China will overtake Japan to become the second largest luxury goods market by India is set to become one of the largest market opportunities in the next decade, but challenges remain lack of retail infrastructure, regulatory issues and high duties on luxury imports, for example. Luxury goods are no longer exclusively purchased by the very rich and are being consumed at lower levels of income. A report by McKinsey & Company shows that in China, the next biggest growth opportunity resides in their upper-middle class with annual income between US$15,000 to US$30,000. Investment strategy: buy consumer companies in the least developed economies To take advantage of the emerging market consumer theme, investors must look for both consumer staples and consumer discretionary companies in the least developed economies. In addition, further opportunities exist where consumption of food has been satisfied, but consumption of durable goods has not. These are: Brazil, China, Colombia, Egypt, India, Indonesia, Mexico, Peru, Philippines, South Africa, Thailand and Turkey. Chile, Hungary, Malaysia, Poland and Russia, however, are approaching the point at which consumption growth decelerates. 6 Luxury clothing, watches, perfumes, cosmetics, jewelry and accessories such as belts, ties and shoes. 7 Spring 2012 Update: Luxury Goods Worldwide Market Study, Bain.com, May Global Powers of Luxury Goods 2014 In the hands of the consumer, Deloitte. 9 Tapping China s luxury-goods market, McKinsey & Company, April EGA Investment Strategy Commentary 7

8 Consumer companies have three very attractive traits: sustainable long run earnings growth, high profitability and relatively low volatility of returns. High quality fundamentals Emerging market consumer sectors have delivered higher earning growth in four of the last seven years when compared to the broader emerging market equity index. Although earnings have disappointed over the last two years, we believe this should be a temporary relapse since consensus earnings are forecast to rebound in 2014 and Based on these estimates, EGA calculates that the EM consumer sectors would deliver earnings growth of 4.1% in 2014 and 16.2% in 2015, respectively, surpassing the rates of growth offered by the overall emerging markets index (3.8% in 2014 and 9. in 2015). 10 FIGURE 23: Emerging Market Sector Earnings Growth Earnings Growth e 2015e MSCI EM Index EM Consumer (Staples & Discretionary) Source: Bloomberg, EGA. Data as of 9/30/2014. EM Consumer reflects the market capitalization-weighted average of the MSCI EM Consumer Staples and MSCI EM Consumer Discretionary indices. Past performance does not guarantee future results. Furthermore, corporate profitability within the EM consumer sectors are better than that of the broad MSCI Emerging Markets (EM) Index: With return on equity (ROE) estimates at 14.4% and 15. (2014 and 2015), the EM consumer sectors imply greater estimated profitability than the broader MSCI EM Index (12.7% and 12.9% in 2014 and 2015 respectively). Higher ratios of profitability are able to support higher market valuations. The EM consumer sectors currently trade at an estimated 17.3 times and 14.9 times 2014 and 2015 earnings, respectively (Figure 23) a premium to the overall emerging markets index (10.9 times in 2014 and 9.8 times in 2015). We believe this premium is deserved and reflects higher ROE and higher long term growth prospects in the consumer sectors. The dividend yield for the EM consumer sectors (1.9% in 2014 and estimated 2.1% in 2015) is below that of the MSCI EM Index (3.1% for 2014 and estimated 3.4% for 2015), but is compensated with higher dividend growth EGA finds that Quality and Growth have been the winning investment styles in EM since the Great Financial Crisis of 2008 and emerging consumer stocks possess both these characteristics FIGURE 24: Quality Fundamentals EM Consumer MSCI EM Index Price to Earnings Return on Equity Dividend Yield Earnings Growth 2014e 2015e 2014e 2015e 2014e 2015e 2014e 2015e % % 2.1% 4.1% 16.2% % 12.9% 3.1% 3.4% 3.8% 9. Source: Bloomberg, EGA. Data as of 10/31/2014. Reflects consensus analysts estimates. EM Consumer reflects the market capitalization-weighted average of the MSCI EM Consumer Staples and MSCI EM Consumer Discretionary indices. Past performance does not guarantee future results. EM consumer stocks have delivered better returns with less volatility Over the past three years the EM consumer sectors have generated better returns, with three- year annualized total returns of 7.1% and 4.8% for MSCI EM Consumer Staples Index and MSCI EM Consumer Discretionary Index, respectively, compared to 3.6% for the overall emerging markets (as represented by the MSCI EM Index, see Figure 25). FIGURE 25: Annualized Total Return (%) 3-year Annualized Total Return (3-year) 8% 7% 6% 5% 4% 3% 2% 1% 7.1% MSCI EM Consumer Staples Index 4.8% MSCI EM Consumer Discretionary Index 3.6% MSCI EM Index Source: Bloomberg, MSCI, EGA. Data as of 10/31/2014. Past performance does not guarantee future results. 10 EM consumer sectors are the market capitalization-weighted average of the MSCI EM Consumer Staples and MSCI EM Consumer Discretionary indices. EGA Investment Strategy Commentary 8

9 Indeed, within emerging markets the consumer discretionary and the consumer staples sectors have exhibited lower volatility and generated more favorable risk-adjusted returns (see Figure 26). FIGURE 26: Annualized Volatility and Sharpe Ratio 3-year Annualized Volatility 16% 15% 14% 13% 12% % MSCI EM Consumer Staples Index Annualized Volatility 15.6% 0.16 MSCI EM Consumer Discretionary Index Sharpe Ratio (r.h.s.) 15.5% 0.08 MSCI EM Index Sharpe Ratio Other sectors that stand to benefit as the consumption theme develops are financials and healthcare. As with the consumer sectors, financials and healthcare are geared towards domestic demand rather than external demand, through exports. The financials sector, predominantly banks would see growth in its asset base and an increase in credit penetration. Loans to GDP ratio of EM banks are below that of their developed market counterparts and there is scope for this gap to narrow. The saying health is wealth means that the state of good health is more valuable than having material wealth. Health should therefore be perceived as a necessity, but the empirical evidence suggests otherwise. Healthcare behaves like a luxury good and only becomes popular at very high levels of income after the consumption of discretionary goods is satisfied. Source: Bloomberg, MSCI, EGA. Data as of 10/31/2014. Past performance does not guarantee future results. Conclusion The emerging consumer opportunity is well rehearsed and remains an enduring theme. Favorable demographics support rapid population and labor force growth in the emerging market economies. Together with continued wage and credit growth, this should fuel sustainable economic and consumption growth. Investors must look for both consumer staples and consumer discretionary companies in the least developed economies, and for stocks in the discretionary sector in countries where the consumption of staples has been satisfied, but consumption of durable goods has not. We believe this opportunity exists principally in Brazil, China, Colombia, Egypt, India, Indonesia, Malaysia, Mexico, Peru, Philippines, South Africa, Thailand and Turkey. EGA INVESTMENT STRATEGY TEAM: Nicholas Smithie Chief Investment Strategist Edward Kerschner, CFA Vice Chairman Steve Mo Investment Strategist Neeraj Agarwal Investment Strategist emergingglobaladvisors.com EGA Investment Strategy Commentary 9

10 Definitions Developed Markets (DM) reflects those countries classified as such by FTSE as of September Dividend Yield is a ratio that shows how much a company pays out in dividends each year relative to its share price. Emerging Markets (EM) reflects those countries in the FTSE Emerging Index as of September Gross Domestic Product (GDP) is the market value of all goods and services produced within the economy in a given period of time. Growth represents the most expensive quintile of stocks within the MSCI EM Index based on an equal-weighted ranking of 12-month forward P/E, trailing P/B and trailing dividend yield. MSCI Emerging Market Consumer Discretionary Index is an index that is designed to measure equity market performance of large and mid cap securities classified in the Consumer Discretionary sector per GICS. MSCI Emerging Market Consumer Staples Index is an index that is designed to measure equity market performance of large and mid cap securities classified in the Consumer Staples sector per GICS. MSCI Emerging Markets (EM) Index is an index that is designed to measure equity market performance in global emerging markets. Price/Earnings (P/E) Ratio (Forward) is the sum of Bloomberg consensus estimates for the future 12-month earnings of the equity holdings, divided by the total market value of the equity holdings. Both positive and negative earnings are included in the calculation. Purchasing Power Parity (PPP) is an economic theory that estimates the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to each currency s purchasing power. Quality represents the quintile of stocks within the MSCI EM Index with the highest return on equity and lowest net debt-to-equity ratio, with those factors equally-weighted. Return on Equity (ROE) is the amount of net income earned as a percentage of shareholders equity. Sharpe Ratio is the average return in excess of the risk-free rate divided by the standard deviation of return; a measure of the average excess return earned per unit of standard deviation of return. Disclosures and Risks Investors should carefully consider the investment objectives, risks, charges and expenses of a Fund before investing. To obtain a prospectus for any EGA or EGShares Funds and other important information, as well as to obtain most recent index performance, please call or visit emergingglobaladvisors.com to view or download a prospectus. Read the prospectus carefully before investing. Emerging market investments involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles, from economic or political instability in other nations or increased volatility and lower trading volume. Small and mid-cap companies generally will have greater volatility in price than the stocks of large companies due to limited product lines or resources, or a dependency upon a particular market niche. Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses, which could reduce returns. Indexes are unmanaged and one cannot invest directly in an index. The MSCI information may only be used for your internal use, may not be reproduced or disseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. 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The Global Industry Classification Standard ( GICS ) was developed by and is the exclusive property and a service mark of MSCI Inc. ( MSCI ) and Standard & Poor s, a division of The McGraw-Hill Companies, Inc. ( S&P ) and is licensed for use by Emerging Global Advisors, LLC. Neither MSCI, S&P nor any third party involved in making or compiling the GICS or any GICS classifications makes any express or implied warranties or representations with respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability and fitness for a particular purpose with respect to any of such standard or classification. 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This presentation may include estimates, projections and other forward-looking statements. Due to numerous factors, actual events may differ substantially from those presented. Emerging Global Advisors, LLC assumes no duty to update any such statements. Past performance is no guarantee of future results. ETF shares are not individually redeemable and owners of the shares may acquire those shares from the Funds and tender those shares for redemption to the Fund in Creation Units only, typically consisting of aggregations of 50,000 shares. Nicholas Smithie and Edward Kerschner are Registered Representatives of ALPS Distributors, Inc. EGShares Funds ( Funds ) are distributed by ALPS Distributors, Inc. ALPS and Emerging Global Advisors are unaffiliated entities Emerging Global Advisors, LLC. All rights reserved. EGASM, EGShares SM and EGAI SM are service marks of Emerging Global Advisors, LLC. 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