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.

Median Percentage Domestic Shareholder Base for Large-Caps Across Region-Country

*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. 

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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.