4. Vanguard Emerging Markets Stock Index Fund (NYSE:VWO)
Vanguard Emerging Markets Stock Index Fund (NYSE:VWO) holds stocks of companies based in global emerging markets, such as China, Brazil, Taiwan, and South Africa. The benchmark for the fund is FTSE Emerging Markets All Cap China A Inclusion Index. It is a long-term investment idea, with high potential for growth, but also high risk. Vanguard Emerging Markets Stock Index Fund (NYSE:VWO) offers an expense ratio of 0.08%, with total net assets exceeding $100 billion and a portfolio comprising 5,446 equities as of April 30.
One of the primary holdings of Vanguard Emerging Markets Stock Index Fund (NYSE:VWO) is Alibaba Group Holding Limited (NYSE:BABA), the Chinese e-commerce giant. On May 31, Truist analyst Youssef Squali raised the price target on Alibaba Group Holding Limited (NYSE:BABA) to $145 from $132 and maintained a Buy rating on the shares. The analyst noted that while the company is not “out of the woods” from macro headwinds, he is more optimistic about Alibaba Group Holding Limited (NYSE:BABA) given the bullish remarks from China’s Vice President about upcoming measures to support the economy, the positive early signs for Chinese audit concessions due to U.S. delisting fears, and the management’s cost efficiency measures to ease Alibaba Group Holding Limited (NYSE:BABA)’s near-term margin pressures.
According to Insider Monkey’s Q1 data, 100 hedge funds placed long bets on Alibaba Group Holding Limited (NYSE:BABA), up from 96 funds in the prior quarter. Ken Fisher’s Fisher Asset Management held the leading position in the company, comprising 14.4 million shares worth $1.5 billion.
Here is what Altron Capital Management has to say about Alibaba Group Holding Limited (NYSE:BABA) in its Q4 2021 investor letter:
“The negative headlines surrounding Alibaba seemingly have no end and have certainly tested our conviction in this investment over the past half year or so. The company’s latest earnings report brought lower margins, partially because of slowdown in China and partially because of increased investment into its businesses. Alibaba also lowered its guidance for the coming year, adding even more pressure to the share price. Furthermore, the Chinese government’s talk of “common prosperity” and Alibaba’s USD 15.5 billion ‘investment’ toward the cause has not helped turn around short-term sentiment for Alibaba investors. Fellow tech giant Didi has also announced that they would delist from New York, sparking fears that Alibaba may be next. Despite all the negative press, we still maintain our bullish position in Alibaba. While increased government regulation will likely result in lower long-term margins and/or increased effective tax rates, we still believe the current share price drastically undervalues the company. The company’s core commerce business is still growing at double-digit rates, as are its cloud business and international ecommerce platform. The cloud business, once at scale, should provide high-margin growth offsetting some of the negatives of new regulations. With Alibaba currently trading at a low-teens multiple of future earnings, we see no reason to sell even though our estimate of the company’s fair value has certainly decreased since we first purchased shares in the company. The issues surrounding Alibaba are complex and addressing each issue surrounding the company would take up far too much space in these letters than we would like. However, any clients that have concerns about our investment in Alibaba that have not been addressed in previous letters or discussions are encouraged to contact us with your questions.”
