Despite recent wobbles, investors who have stayed the course in emerging market equities since 2002 have been well rewarded for their loyalty, enjoying returns of 167 per cent, measured by the returns of the MSCI EM index.
They have done far better than those schmucks who instead put their faith in the mighty US stock market, where returns over the same period, while less volatile, have been a comparatively paltry 91 per cent, at least when measured by the S&P 1500 index, a broad-based measure (all data reflect simple index returns, ie not including dividend income).
But what about those US-listed stocks with significant exposure to the emerging markets?
On the face of it, one might expect these hybrids to have generated returns that fall somewhere between the extremes of purer emerging or developed market companies.
If so, one would be wrong. Very wrong. Since 2002, a universe of 39 such stocks created by Neuberger Berman, a New York-based investment house, has, in fact, delivered returns of 424 per cent, more than quintupling investors’ money, as the first chart shows.
These 39 companies each generate at least 15 per cent of their revenues from emerging markets, a figure rising to 40 per cent or more for Yum Brands, the operator of fast food outlets such as KFC and Pizza Hut; Mead Johnson Nutrition, a manufacturer of infant formula; and Avon Products, the door-to-door cosmetics company.
The list also includes a number of other household names such as PepsiCo, McDonald’s, Colgate-Palmolive, Nike and Procter & Gamble, as indicated in the second chart.
Conrad Saldanha, senior portfolio manager for emerging markets equity at Neuberger Berman, says these companies and their peers in the EM Sales index have benefited from “the rise of the global middle class”.
“So far this century, stocks with the highest proportion of revenues coming from the emerging world, regardless of whether or not those stocks are listed or domiciled there, have far outperformed both the emerging and developed world indices,” he says.
“They have continued to do so even during the recent years in which emerging markets have run out of steam.”
So why have these EM-focused US-listed stocks performed so much better than the alternatives?
One thing to note is that the 39 companies are heavily skewed sectorally, with most geared to selling “consumer staples”, be they in the household products, food and drink or tobacco sectors.
“It’s almost exclusively dominated by consumer names and very strong brands, the highest quality names that are out there. These are global multinationals,” says Mr Saldanha.
This sectoral bias means the EM Sales index contains none of the energy, materials or banking stocks that have dragged down developed world equity indices in recent years.
To be fair, though, the index has also not benefited from the technology stocks that were the main driver of the US equity markets last year. Nor, quite clearly, did it benefit from the rapid rise in commodity prices prior to 2014.
Overall, the sectoral bias would appear to explain part of the outperformance vis-à-vis the broader US equity market, but certainly not all of it: US consumer staple stocks in general have only returned 135 per cent in price terms since 2002, better than the returns of materials and financials (but not energy stocks), well behind the returns of the EM Sales index.
Clearly the time period chosen will also affect the results. Since the start of 2011, just before emerging market equities peaked, the EM Sales index has underperformed the wider S&P 1500, rising 37 per cent compared to the S&P’s 65 per cent.
However the EM Sales index has strongly outperformed EM equities themselves (down 26 per cent) over this period. Mr Saldanha attributes this to their defensive nature and status as “quality growth” companies, which has shielded them from the wider sell-off.
Overall, though, given the relatively long sweep of the data, it would seem churlish to dismiss the startling performance of the EM Sales index as an aberration resulting from the judicious selection of the time period.
Some believe there are sound reasons for choosing to play EM consumer trends via developed world-listed stocks.
“In general, we currently prefer to access equity investments such as emerging market consumer plays via developed market stocks,” says Mark Haefele, global chief investment officer at UBS Wealth Management.
Mr Haefele favours companies that are likely to produce “durable earnings growth”, a characteristic he believes is more prevalent in developed markets at present.
That said, he argues that in sectors such as healthcare, education, and infrastructure, most of the gains from EM growth will accrue to stocks actually listed in the emerging world.
Patrick Mange, emerging markets strategist at BNP Paribas Investment Partners, argues that developed world-listed companies tend to be better managed, more transparent and have superior corporate governance to their EM peers.
For developed world investors, there can also be no currency risk, reducing the risk premium, he adds.
Despite his findings, Mr Saldanha is less convinced, however. He says that Neuberger Berman’s equity team view many of the stocks in the EM Sales index as “rather expensive ways to play emerging markets at the moment”.
More broadly, he says that, in common with many other EM investors, he prefers to get “pure” EM exposure, rather than being “bogged down by developed world exposure where growth is probably slower”.
这39家公司至少有15%的营收来自新兴市场，其中经营肯德基(KFC)和必胜客(Pizza Hut)等快餐门店的百胜餐饮集团(Yum Brands)；婴幼儿配方奶粉生产商美赞臣(Mead Johnson Nutrition)以及直销化妆品公司雅芳(Avon Products)的比例高达40%或更高。
这个名单还包括其他很多家喻户晓的品牌，如百事可乐(PepsiCo)、麦当劳(McDonald’s)、高露洁棕榄(Colgate-Palmolive)、耐克(Nike)和宝洁(Procter & Gamble)，如图表二所示。
Neuberger Berman新兴市场股票投资组合高级经理康拉德?萨尔达尼亚(Conrad Saldanha)表示，这些公司以及新兴市场销售指数(EM Sales index)的其他成份股公司都受益于“全球中产阶级的壮大”。
瑞银财富管理(UBS Wealth Management)全球首席投资官马克?黑费勒(Mark Haefele)表示：“总体而言，我们在股票投资上现在更喜欢通过发达市场股票来投资新兴市场消费者板块。”
法国巴黎银行投资伙伴公司(BNP Paribas Investment Partners)新兴市场策略师帕特里克?芒热(Patrick Mange)主张，在发达国家上市的公司往往管理更完善、更透明，而且有着比新兴市场公司更优越的公司治理。