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By the Numbers

APRIL 24, 2017

Emerging Markets Pioneer: Capital Group Paved the Way 30 Years Ago

Emerging markets is one of the most dynamic areas of global investing, and Capital Group was there from the very beginning.

30 — Number of years Capital Group has been investing in emerging markets

Thirty years ago, the World Bank approached Capital Group with a novel idea: promote investment in developing economies. Would Capital Group be interested in managing a fund that invested in less-developed countries?

“Very few people invested in the developing world [in 1986],” recalls long-time Capital Group portfolio manager Shaw Wagener. “Most investment management firms looked at this not as an opportunity, but as a cost.... We looked at it differently.”

So with just $50 million raised from a handful of investors, Capital Group launched the Emerging Markets Growth Fund in 1986. It was the world’s first emerging markets equity fund.

Research Makes a Difference

In the decades that followed, Capital Group continued opening doors, investing in China in 1992, India in 1993, and Russia in 1996. Data was scarce and unreliable in those days, and many developing countries weren't open to foreign investors. Those that were had strict rules on the flow of money, capital gains and taxes.

On-the-ground research, a hallmark of Capital Group’s investment philosophy, served Capital well as it forged ahead. The company broke new ground, sending analysts to meet with companies in developing countries at a time when such visits were rare.

“I took my first research trip to Argentina, Brazil and Chile in June of 1986,” says Capital Group portfolio manager Victor Kohn. “I had initially 18 meetings. In 13 of them, I was the first analyst they had ever received.”

Opportunities in Emerging Markets

Flash forward to today: Emerging markets is one of the most dynamic areas of global investing, and Capital Group has more than $45 billion in assets under management focused on developing countries.

In 1986, "our belief was that growth rates in emerging markets would be higher than those in the developed world and that there would be tremendous long-term investment opportunities for our clients,” says Capital Group portfolio manager David Fisher, an original portfolio manager of the Emerging Markets Growth Fund. “That belief is equally strong today."


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