Optimism for the Road Ahead
Founder- and family-led businesses have been outshining non-family peers globally since 2006, boasting better margins, stronger growth, and robust balance sheets.*
- These entities are more prevalent in emerging markets and in countries like India, Brazil, and Southeast Asia, where these businesses dominate, comprising over half of the major firms.
- This founder- and family-led company prevalence suggests a closer alignment of management and shareholder interests, mitigating principal-agent conflicts and these companies are typically younger, amplifying their outperformance potential.*
- If we look at emerging markets as a whole, the median country boasts a ~60% domestic shareholder base, in comparison to ~30% for the median country in developed markets ex US.
Why does it matter? This is yet another lens through which emerging market portfolios can harvest diversification benefits with fewer shareholder commonalities across emerging market countries as compared to what we typically see across countries in the developed markets.
We believe there continues to be positive signposts indicating that opportunities in emerging markets have only improved with time and a slew of positive economic and government reforms support them.
Takeaways
—Founder- and family-led businesses boast better margins and stronger growth
—These businesses are more prevalent in emerging markets
—Positive economic and government reforms provide further support
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Median Percentage Domestic Shareholder Base for Large-Caps Across Region-Country
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| TOTAL RETURNS AS OF 30 APR 2024 | 1 MO | 3 MO | YTD | 1YR | 3YR | 5YR | SINCE INCEPTION (01-DEC-14) |
| Emerging Markets Equity Strategy (net of fees) % | 0.04 | 7.25 | 10.64 | 35.16 | 3.97 | 10.03 | 7.30 |
| MSCI Emerging Markets Index % | 0.45 | 7.83 | 2.83 | 9.88 | -5.69 | 1.89 | 2.86 |
GQG Partners LLC claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this performance information in compliance with the GIPS standards. GIPS® is a registered trademark of CFA Institute. CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. GIPS composite reports may be obtained by emailing clientservices@gqg.com.
Performance data is based on the firm’s composite for the strategy. The composite was created in June 2016. Performance presented prior to June 1, 2016 was achieved prior to the creation of the firm. The prior track record has been reviewed by Ashland Partners & Company, LLP and conforms to the portability requirements of the GIPS standards. On June 28, 2017, ACA Performance Services, LLC acquired the investment performance service business of Ashland Partners & Company, LLP. For periods after June 1, 2016, the composites consist of accounts managed by GQG pursuant to the strategy.
The US dollar is the currency used to express performance. Returns are presented net of management fees and include the reinvestment of all income. Net performance is calculated after the deduction of actual trading expenses and other administrative fees (custody, legal, administration, audit and organization fees). Net returns are calculated using the highest/model rack rate fee. Net performance is net of foreign withholding taxes. PAST PERFORMANCE MAY NOT BE INDICATIVE OF FUTURE RESULTS. Please see the Appendix for additional disclosures regarding the composites. Returns for periods greater than one year are annualized.
*Authors: Eugene Klerk Richard Kersley Maria Bhatti Brandon Vair. Contributors: Akanksha Kharbanda Amit Phillips. ”Research Institute: The CS Family 1000 in 2018”, Credit Suisse, September 2018. https://www.credit-suisse.com/media/assets/corporate/docs/about-us/research/publications/the-cs-family-1000-in-2018.pdf
BENCHMARK INFORMATION
MSCI benchmark returns have been obtained from MSCI, a non-affiliated third-party source. Neither MSCI nor any other party involved in or related to compiling, computing or creating the MSCI data makes any express or implied warranties or representations with respect to such data (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any of such data. Without limiting the foregoing, in no event shall MSCI, any of its affiliates or any third party involved in or related to compiling, computing, or creating the data have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.
The MSCI Emerging Markets (Net) Index captures large and mid cap representation across 24 Emerging Markets (EM) countries. With 1,375 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country. * EM countries include Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Kuwait, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Saudi Arabia, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates.