Emerging markets: 30 years in the making | Capital Group

 

 

Emerging markets: 30 years in the making

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

 

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.

1986

Emerging Markets Growth Fund launches1

US$50 billion

AUM in EM-focused strategies

60

EM analysts in our global network

 

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.

EM countries we visited in 2017

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.

Key reasons to consider investing in emerging markets:

EM economies show great growth potential relative to their small
size4

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

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

Emerging market funds in focus

Emerging Markets Debt (blend)

A long-term strategic approach to EM debt investing

Available as a separate account and Luxembourg-domiciled fund

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Emerging Markets Debt (local)

Capitalising on the dynamism of local currency EM debt

Available as a separate account and Luxembourg-domiciled fund

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Emerging Markets Total Opportunities

A multi-asset approach combining the potential for EM growth with lower volatility

Available as a separate account and Luxembourg-domiciled fund

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Emerging Markets Growth

An equity strategy accessing growth opportunities in EM

Available as a separate account and Luxembourg-domiciled fund

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Data as at 31 December 2018 and attributed to Capital Group, unless otherwise stated. AUM: assets under management.
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.

MSCI 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 Emerging markets currently account for nearly 70% of the global GDP growth, yet represent a small portion of the global equity market. Nominal GDP estimates for 2018 in US dollars, current prices. Source: IMF World Economic Outlook Database October 2018

Risk factors you should consider before investing:

  • This material is not intended to provide investment advice or be considered a personal recommendation.
  • The value of investments can go down as well as up and you may lose some or all of your initial investment.
  •  Past results are not a guide to future results.
  • If the currency in which you invest strengthens against the currency in which the underlying investments of the fund are made, the value of your investment will decrease.
  • Depending on the strategy, risks may be associated with investing in fixed income, emerging markets and/or high-yield securities; emerging markets are volatile and may suffer from liquidity problems.