Emerging markets: 30 years in the making

READ EM E-BOOK

Emerging markets: 30 years in the making

Access the long-term potential of emerging markets with a pioneer.

1986

Emerging Markets Growth Fund launches¹

US$50 billion

Assets under management in EM-focused strategies

59 EM analysts in our global network

A pioneer in EM

We started the world’s first emerging market equity fund

Though people have been investing in emerging markets (EM) since the first trade routes were navigated, Capital Group formalised its role over 30 years ago when a division of The World Bank asked us to develop the first EM equity fund.

Their hope was to promote private investment in developing economies, to help drive inward investment and fuel economic growth. A key reason that Capital Group was chosen to manage the fund was its willingness to dedicate a research team to EM.

READ EM E-BOOK

Boots on the ground

Deep research capabilities to unearth opportunities

At Capital Group our focus is and always has been on fundamental research. We pride ourselves on the fact that research is a core element of our philosophy. As well as desk research and traditional field research, our analysts are encouraged to venture ‘off the beaten path’. We are committed to engaging directly with the companies that we invest in, which is what enables us to make intelligent, well-informed, ‘bottom-up’ investment decisions.

A key difference in our process is that our investment analysts not only provide investment ideas to portfolio managers, but are also able to act on the courage of their convictions and invest.

Emerging markets we visited in 2019

The emerging opportunity

Emerging markets demonstrate huge potential

EMs have developed, broadened and deepened – now consisting of more than 60 different countries, with varying fundamentals, different economic growth patterns and often widely diverging valuations. Despite constituting only 12%² of the global equity market, emerging markets remain key drivers of global growth, accounting for 40% of the world’s GDP³ and nearly 70% of global growth⁴.

Key reasons to consider investing in emerging markets:

EM economies show great growth potential relative to their small size

Rising disposable income and middle class suggest long-term growth potential

Long-term structural growth from structural reforms, improved infrastructure and productivity

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Emerging market funds in focus

Capital Group New World Fund (AU)

Capture the growth potential of developing economies

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Capital Group Emerging Markets Total Opportunities Fund (AU)

Seeking emerging market equity-like returns with lower volatility

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Emerging markets: Over 30 years in the making

Reflections on more than 3 decades of EM investing and the next chapters of development.

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Past results are not a guarantee of future results. The value of investments can go down as well as up and you may lose some or all of your initial investment. Emerging markets are volatile and may suffer from liquidity problems.

For illustrative purposes only

Data as at 31 December 2019 and attributed to Capital Group, unless otherwise stated.

The Capital Group companies manage equities through three investment divisions that make investment and proxy voting decisions independently. Fixed income investment professionals provide fixed income research and investment management across the Capital organisation; however, for securities with equity characteristics, they act solely on behalf of one of the three equity investment groups.

¹ Emerging Markets Growth Fund is a US-domiciled open-end interval fund generally offered to institutional investors and other qualified purchasers in the US by Capital International, Inc. American Funds are not registered for sale outside of the United States.

²MSCI Emerging Markets Index market value as a % of MSCI All Country World Index (ACWI). Source: Datastream

³ Nominal gross domestic product (GDP) in billions of US dollars. Source: International Monetary Fund: World Economic Outlook Database, October 2018 edition

⁴ Growth forecasts (based on purchasing power parity). Source: International Monetary Fund: World Economic Outlook Database, October 2019 edition

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