Investing Today In The Economies Of Tomorrow, An Emerging Market Edition (Podcast Transcript)
- Understand the landscape of both emerging and frontier markets along with the opportunities and threats to the marketplace.
- Break down and learn about the Asian Growth Cubs ETF (CUBS).
- Maurits Pot, Founder & CIO of Dawn Global educates and navigates investors through the emerging and frontier markets.
Editors' Note: Please note that due to time and audio constraints, transcription may not be perfect. We encourage you to listen to the podcast, embedded below, if you need any clarification. We hope you enjoy.
2:00 - Introduction to Dawn Global
5:30 - How has the recent crackdown in Chinese tech space effect EM?
6:30 - What's the overall landscape for emerging markets?
9:30 - Tell us about the Asian Growth Cubs ETF (CUBS)
17:45 - Deeper dive into CUBS... holdings, expense ratios, and other specs..
22:00 - Where do you see CUBS fitting into a traditional portfolio?
24:00 - What are some of the biggest challenges for CUBS in the EM space today?
25:30 - What would you say to someone who's not a believer in EM?
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Jason Capul: Welcome to Let's Talk ETFs. I'm your host Jason Capul, and I've been monitoring the investment space throughout my entire carrier. Here at Seeking Alpha I’m an ETF strategist and my role is to uncover and bring forward news and information to the investor community that is meaningful and actionable. Each week, a different guest and I will take an in-depth look at a particular aspect of the rapidly evolving exchange traded fund space with a focus on how investors can best utilize ETFs to reach their investment goals.
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For reference purposes, this podcast is being recorded on the afternoon of July 27, 2021. In today's episode, we have a special guest joining us from Dawn Global, Maurits Pot. Maurits is the Founder and CIO of Dawn Global, which is a recently launched organization covering active thematic ETF investing in emerging and frontier markets. Maurits has a degree from Middlebury College and University of Oxford.
He has also been a public and private equity investor in both the emerging markets and frontier markets for the past six years, and has held previous roles at Vitol and Goldman Sachs. He's an expert in the investing space and we're very excited for him to join us today to have an open discussion around the topic of emerging markets and how the ETF markets and how the ETF marketplace fits in. So, without further mention, I'd like to welcome our guest Maurits Pot:
Maurits Pot: Thanks, Jason. I'm very excited to be on your show. I look forward to the discussion. A lot to cover in EM, where lot is happening today.
JC: Absolutely. Well, we appreciate you taking your time out of your day to sit down and speak with us. But really kind of what we want to do to start everything off and before we jump into all the details of our podcast today, do you think it'd be possible if you could provide our listeners with a little bit more information about yourself and your background? Perhaps a little bit more details around Dawn Global and things of that nature?
MP: Sure. So, I grew up in Europe. I joined high school in Europe. My interests were primarily in history, current affairs and geography. I continued my education in U.S., did high school and college, I developed an interest in [Investing Journal] in high school in the U.S. I pursued that interest in EM and in history and geography through internships, starting in my high school and summers in EM. Initially, I was a volunteer.
I visited South Africa and Brazil when I was in high school. And during college, I spent my summers working for a microfinance bank in Malawi, for the opposition party of the government in Zimbabwe on the mortgage [indiscernible] and also for an EM focus investment fund out of London. These experiences at an early age gave me an appreciation for the opportunity bills and the complexity of doing business in EM, and the role of the consumer in driving that [growth and] change.
Back in college in U.S., I studied Liberal Arts, which for me primarily meant international relation develop economics, what I realized I needed to get professional training and experience if I could generally be effective and credible in EM. I started my working career at Goldman Sachs in Natural Resources M&A, I subsequently worked in Vitol in commodities trading. For the last 5.5 years, I've been investing in front-end emerging markets as a public and private equity investor, coming to these markets every quarter engagement company’s manager teams regulators [indiscernible] and with both local and foreign investors. This has given me an insight into the companies, into the opportunities and also into the different countries dynamics in the countries and I focus on with my new firm Dawn Global.
Dawn Global listed the first ETF last month, The Asian Growth Cubs ETF. The Cubs ETF is the first active thematic ETF in the world focused on emerging and front-end market equities. Dawn is dedicated to investing in the next generation of EM, which we believe is not accessible for your index. Countries that are large, growing are liquid, yet have loads and loads of index inclusion and therefore has loads foreign [indiscernible] representation. Dawn has completely three core goals, and the first is to make next generation merging market investing accessible, affordable, efficient, scalable, and [research benchmark] driven.
The second goal is to open up the next generation of emerging markets to investors firm, easy to access structure, which we also believe has potential tax and other cost efficiencies, which is an ETF. We've identified the universe of roughly 8 trillion to 10 trillion market cap universe that has load to no-ETF penetration today. We believe that universe covers some of the youngest, some of the fastest growing, but also some of the most [indiscernible] and hopefully some of the largest economies in the world.
Thirdly, when we think about what is the approach Dawn takes, we look to take an actively managed, management engaged benchmark agnostic, regionally, not globally diversified, research driven, ESG compliant, and ultimately a commitment to quality, liquidity, transparency and risk management. I think the recent events in China underscore that the need to diversify EM exposure, the rarity is it’s very hard to achieve diversified EM exposure and you don't get that [indiscernible] today.
JC: Excellent. And it sounds like you’ve got a well versed background. And for someone that's going to be starting an EM fund, with your background, it seems that the two are going to go hand in hand. And just for our listeners, I know, Maurits, you just mentioned the China issue, I guess that's in reference to the overall regulatory crackdown that's going on in the Chinese tech space, is that correct?
MP: Correct. And I think you've seen it started in technology, but it's also now potentially extended to education. And then, I think you previously had, you know, the concentration risk of China in the indices, and therefore in the ETF [indiscernible] indices has been flagged, but today, there's been low to no effort to really diversify beyond that concentration risk. You've seen the emergence of ex-China indices. But in reality what it has done is, it has basically concentrated exposure on Taiwan, on Korea, on India, and Brazil. And ironically, some of the ex-China indices actually stop China exposure, because well, they've added they've added South Africa. In South Africa, the main position they've added is Naspers. And Naspers is one of the [biggest shows] in Tencent. So, even the ex-China indices actually have material China exposure still.
JC: Interesting. So, before we jump into Dawn Global and the ETF that you guys have, I wanted to kind of get your general take on, I guess what you would say the overall landscape for emerging markets and frontier market investing is, you know, for some of our listeners out there, if you could explain the difference between the two, you know, why an investor should care about this space? You know, what are some key notes that someone should maybe take away from, you know, the EM space, and, you know, things, you know, down that kind of sort of line?
MP: So, I think if you think about the emerging market versus frontier distinction, hopefully that’s a distinction made by indices. I think, frankly, the distinction is often quite flawed. If you look at the construction of the frontier in our universe it includes countries like Iceland, such as Kuwait, but also countries such Bangladesh. Frankly, I struggle to see similarities between those three countries. That's why frankly, look beyond the index classification of these countries.
When I look at EM more broadly, I'm looking at the economies of tomorrow. And for me that means growth and [ultimate] that means is EM investing is about investing today in the economies of tomorrow. Specifically, when I think about what are the key things I look at, when I look at EM, and what draws me to EM, I think there's a few criteria. And those include size, growth, demographics, digital adoption, and increasing diversification. If you stick each of those turn by turn, if you look at size, EM today represents roughly 60% of global GDP.
That's expected to reach 75% of global GDP in the next 15 years. If we move on to growth, if you look at EM today or FM today, some of the fastest growing economies historically and looking forward are within the emerging market universe. Emerging Asia has been and continues – is forecasted to be the fastest growing region globally for the next six years. Looking specifically at a few countries, there's only three countries in the world that have grown GDP for 40 consecutive years. Those are Bangladesh, China, and Vietnam. If you look at demographics, 85% of the world's population under 24 lives in EM, amid stagnant population growth in U.S. you still see broader population growth in emerging market countries.
If you look at digital adoption, what you are see is that the proliferation of a young age, educated population has accelerated digital adoption in some of these emerging market countries. The confidence of the middle class consumer population and rising smartphone penetration has kind of steepened the growth grade in mobile emerging market economies. Moving on to diversification, from an investment perspective, EM is seen as diversification. And the most – the way most investors access EM, is alternative in a highly concentrated way through the index, getting genuine liquidity EM diversification is actually very hard. That is what – that is what Dawn Global is focused on delivering to EM investors.
I think lastly, I think I'd say that obviously the country that has the largest concentration in that index is China today, depending on the index is somewhere between the [high-30% or low-40%]. I think people increase you realize that China is an opportunity, but also risk and I think people are looking diversify beyond that concentration risk. Today, it's very hard to get any genuine diversification beyond that concentration risk. We are looking to offer that through Cubs.
JC: Awesome. And I guess let's dive into Cubs. And I want to talk about the ETF that you guys have and that's Asian Growth Cubs, ETF ticker CUBS. So, your fund is recently launched, which I think, as you mentioned, it came out about a month ago. Can you talk to our audience about what CUBS is, the full scoop behind it, why it was launched, perhaps, you know why it might be different than say a traditional EM ETF out there? I know you mentioned that you guys are the first actively managed thematic ETF. So, that's fantastic news. So, maybe you can build upon that.
MP: Sure. So, as I said, CUBS is in these young [indiscernible] for less than two months. But it's very fundamentally different than any of the other ETFs in emerging market space out there. The active thematic [ETF score] was ultimately invented by Bear Stearns in 2008. The asset class was slightly dormant until Cathie Wood [indiscernible] asset-class starting in 2014 15 through Ark Invest, what we're looking to do is to apply some of the learnings from Ark Invest, but actually applying to a different zip code to different industries and all kinds of different companies, which are in emerging and front-end markets.
So, CUBS is focused actually what I would argue is the next generation of yen, and specifically, its focus on five countries in Southeast Asia, Bangladesh, Indonesia, Pakistan, Philippines, Vietnam. CUBS in my view is an essential yet untapped part of most EM portfolios, and was previously cubs good at being considered too small to irrelevant. The growth of the Cubs countries has propelled CUBS to a size and relevance that can no longer be ignored in greater Yen context. To give you just a bit of context, the collected GDP of CUBS is roughly 90% of that of India. The average smartphone penetration of CUBS has actually surpassed India in the past three years.
The CUBS countries are expected to be amongst the fastest growing economies in the world for the next six years based on the latest IMF data. And the CUBS population today is over 860 million people is expected to reach a billion people in the next 15 years. Yet the waving of CUBS in the large EM indices is only 2%, and therefore maturity [indiscernible]. Looking at the economies within CUBS, what’s interesting is that the CUBS’ economy is increasingly driven by services [indiscernible] manufacturing export driven economies. This means that the growth you can see in CUBS is ultimately going to be more scalable, less capital intensive, and more dynamic.
This is fundamentally different to some of the [principles] you've seen, for example, in the Asian growth tigers in the 1980s and 1990s that were fundamentally driven by manufacturing export driven growth. I think what – beyond the theme of the countries, what actually importantly differentiates CUBS is the process, and I think there's a few layers to that. The first is that CUBS IS an actively managed fund, which means that it has an investment portfolio and an investment process that includes a top down quantitative companies screen and a bottom up qualitative company analysis, coupled with a systematic portfolio of framework.
The top down screen covers five criteria, ESG, size, liquidity, quality, and risk. The bottom up analysis covers three key criteria, which is evaluation, governance, and ultimate financial analysis. Engagement with management is key and ultimately the main thing, at CUBS, you focus not just on the horse, which is the company, but also on the jockey which the management team. What that means is that we underwrite the business model, we also underwrite the manage team, we'll spend time getting to know the both, every single preferred every single manager team in the portfolio today we have spoken to before the product was launched, in a post-COVID world we are visiting in these countries like I used to do in a pre-COVID world.
We also have a current ESG, we have a strict ESG lens, which means today that we exclude certain companies in certain industries. Going forward, we hope to adopt an ESG inclusion policy, once a requisite data is available to support this approach. We speak to every company about ESG and we intend to write a letter once a year to every management team about the importance of ESG in the greater context. I think beyond the actual process, I think you may ask [indiscernible] why is CUBS not accessible today? And I think there's a few reasons. The interesting thing is, unlike in other UN countries such as China, India, and parts LATAM, CUBS has low to no ADR coverage. So, the CUBS universe is 3,500 companies, but there's only three ADR listings.
All three ADR listings are state-owned enterprises. I generally try to share or shy away from [center enterprises]. I will talk about that a bit later. If you look at the ETF coverage, outside of Vietnam it loads no ETF coverage of these countries. For example, Bangladesh doesn’t even have a single ETF. The last ETF in Bangladesh closed 15 months ago. But even within Vietnam, ETFs that you have, for example, the Vaneck ETF, they actually don't give access to the companies you want to be investing in Vietnam. Why? Because in a country like Vietnam, you have a foreign ownership restriction, which means that the regulator restricts the amount of the shareholding foreigners can have in a select number of strategically interesting in many cases, high performing companies.
Well, that means if you buy the Vaneck ETF, you actually or index [indiscernible], which again, I tend to avoid. What we've done is, we've actually find a way to get around that, and I'll talk about that a bit later that we actually are able to give investors access to the best companies in Vietnam through a local route we found. I think, lastly, you may ask, why do you not invest directly into these markets? And I think what people are found have tried to invest directly into these markets is that it's very burdensome, and it's very restrictive. And the issues include account opening, custody, clearing, brokerage, [indiscernible] for most businesses, the hassle world that is just a bridge too far, and therefore they stick to the index which frankly indexes primarily 80% to five countries.
I think a question we may ask is obviously, why does the index don't work. And then what you’ve seen is that basically EM investing is historically driven by indices and the size of the index linked EM product shows how important these indices are. Of the five large ETFs in the world two are emerging markets focused both 80 billion on the management, which underscores the size of EM, index driven universe. But what's interesting is that, in EM, you could argue there's actually a much bigger mandate active over passive [management], given there's a smaller number of liquid quality companies in emerging markets versus developed markets.
What that means, actually, is that you want to have an active lens, when you look at these countries, and you look at these economies. The benchmark driven approach in EM investing we believe is broken, we believe there's a mandate for active management. Specifically, if you think about why, what is the issue the [indiscernible] there's one or two issues. One is the concentration.
So, if you look at the key indices that track most of the funds that flow into mutual funds or ETFs, there's anything concentration on only five countries and that concentration is being roughly that level of last five years, even though the composition of the concentration has changed. But I think the most important thing, and that's frankly, a structural flaw is EM indices, the [mark have weighed, and mark have weighed] basically leads to a portfolio that includes the largest companies in the countries, but not necessarily the fastest growing or the company with the highest growth, the highest return potential.
What's interesting is that if you again, look at the EM ex-China indices, these still have 80% penetration in five countries and the five countries don't go beyond the initial five countries, they basically replaced China with either Brazil or Russia. And frankly, you still have a highly constrained portfolio to only select number of late stage in some cases, maturing EM countries.
JC: Awesome. Yeah, it seems like CUBS is kind of breaking down the walls and almost rewriting the way EM can be invested upon, you know, in terms of, you know, going with the active approach, and, you know, investing in markets that traditionally, you may be either we're not aware of, or had barriers to get into, it seems like more of a streamlined process for an investor who's looking to get clear cut exposure to certain areas. You know, here's the avenue, which I think is fantastic.
MP: Yeah, I mean, I think I think the view we take is the index is not going to reform. EM investors, they want diversification, they can't get it from the index, in order to go to the next generation for emerging markets, you need an active lens, if you don't have an active lens you index to the comment of yesterday. That means the index is steel, tobacco, telco banks, we're focused on the economies of tomorrow, we're focused on industries such as healthcare, TMT FMCG, and FinTech or digital banking and ultimately believe that you need again an active lens to access the next generation of companies and industries in these next generation emerging markets
JC: Awesome. So yeah, can we take a little bit of a deeper dive into CUBS, you know, perhaps you could provide us with some of the funds specs in terms of, you know, perhaps some of the key holdings expense ratios how often the fund is actually adjusted, you know, highlighting some key holdings that might really drive the ETF things that our audience might be keen to learn about?
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MP: Sure. So, you know, the ETF is focused on liquid quality growing ESG compliant companies with dominant local market shares. We have strict country and industry limits to manage single country and single company risk, which we had realized is a concern for many EM investors. The goal is long-term investing, investing through components. We tried to minimize the trading activity given the cost of training in these markets. If we go through the examples of holdings by country, in Bangladesh, an example would be Renata, which is a local – leading local farmer company in Bangladesh, but also has a growing global footprint.
In Indonesia, Bank Jago, which is the leading digital bank in Indonesia, is the exclusive financial services platform for Gojek, Tokopedia, which you may be aware of is the largest technology ecosystem in Indonesia. Gojek and GIC are already shareholders in Bank Jago, it has only been listed from past years. In Pakistan, we look at systems as the leading software company in Pakistan. Again, an example of an emerging local company with a growing international dollarized revenue base, systems is also a good example of a company where liquidity and size are no longer correlated in the end.
In the same way that investors who started we're used to being systems give an idea, is a company of less than a half billion markup, but has amongst the highest daily trading liquidity of companies impacts of today. In Philippines, we look at converge ICT, which is a more [indiscernible] leading cable fiber optic player, dominant fiber optic market share, which we believe will benefit from growing digitalization in the economy. In Vietnam, instead of talking about a company we can maybe talk about the approach, which I mentioned earlier about how we get around the foreigner ownership] restrictions.
The CUBS ETF is invested in the diamond ETF, which is a locally listed ETF in Vietnam, offering exposure some of the best companies in Vietnam, which are foreign ownership restricted, which includes a bank, a technology company, a jeweler, and ultimately the CUBS, ETFs follows the cost of investing in this ETF. So, there's no increments to charge a couple [indiscernible]. And the reason why I mentioned this ETF is that as I mentioned before, the best companies in Vietnam have a foreign ownership limit, that limit in most cases is full.
If you want to buy into this country, that means you have to buy material premium from other foreign shareholders. That thing that we don't think is justifiable. Therefore, we basically find a way to get around that foreigner ownership level by investing in the Diamond ETF. This is again saying that you will not get a few less than, for example, the VanEck, Vietnam or other extractors ETF. I think if you look at the countries on a more high level, what's exciting also is the, kind of reform that you’re seeing in some of these countries, [controlled] by local regulators in an attempt to encourage global investors to come to these markets, and to also encourage local before global listings.
I think nowhere is that more ever than in Indonesia. Indonesia, I think you have like a healthy pipeline of 10 plus [indiscernible] today. Those are expected to increasing this locally for globally. The best example, or the next example is Bukalapak, which is scheduled to IPO later this month. It's a large IPO in Indonesia in a decade. And again, it's listing locally for globally, it’s dominant e-commerce player, outside Tier 1 cities in Indonesia. We [indiscernible] see this also happen in other markets.
For example, in Pakistan, we've seen quite a vibrant IPO pipeline. And that's also been facilitated for local regulatory reform. And I think talking about the mechanics of the fund, it's a – the expense ratio is [indiscernible] basis points, which is the cheapest fee for any actively managed fund folks on the region we've come across, or the active funds are in triple digit range.
The interesting thing is that the passive index on an ETF is focused on [indiscernible] charge anywhere between 59 basis points and 90 basis points, which shows you actually how expensive the passive funds are in the region, the performance in most cases is being [rented out in the welding]. From a portfolio construction perspective, the portfolio is equally weighted semi-annual rebalance and we do that primarily from a risk mitigation point perspective, because we are worried that we are aware of the fact that investors are conscious about concentration risk, conscious about country risk in the end, and we believe that’s the best way to manage those risks for investors back then. I don’t know if that gives you a bit of color?
JC: Yeah, yeah, no, absolutely. I'm glad we were able to break it down a little bit. And you know, from a step-by-step basis, given us some country highlights, as well as just some overall specs of the actual ETF. And I guess taking it even a further step forward, you know, let's just say a person is listening or, or is interested in, you know, maybe putting CUBS into their portfolio. Where do you see it fit in a traditional portfolio? Do you see this as something that will essentially take place of say, an EM ETF that someone might have? Or do you see it as an additional piece? You know, where would you think that it fits in, in terms of the overall construct of a, you know, stock portfolio?
MP: Sure. So, I think [indiscernible] this is a – CUBS fit in as a key diversification for an EM portfolio. And the irony is again, that people go to EM for diversification, but then the exposure they've made in case get to EM is actually highly concentrated. Conventional EM investments being benchmark driven, again, it was mentioned for the benchmarks are heavily skewed journey, a small number of countries which [indiscernible] large return often commodity price exposed, CUBS is folks in the [next generation VN], which has low to no inclusion indices and therefore it's a critical diversification and complementing existing EM ETFs.
CUBS today is too large ignore, evidenced by the benchmarking I mentioned earlier to India. The CUBS is a long-term hold, it's a diversification for the next generation of EM. It's not a short-term trade. We don't believe there's a window, we believe these are, companies that have long-term growth potential, where the early stages of realizing that growth potential and ultimately CUBS is also critical diversification away from overweight China exposure in indices.
China is roughly 40% of the index, CUBS is roughly 2% of the index. The index is not going to weight – increase the weighting of CUBS, we believe you need to add items to your portfolio to get the CUBS exposure and to mitigate China – the overweight exposure. Ultimately, what does CUBS focus on? Young growing digitizing economies.
JC: Awesome. And I guess taking a step back from more of a general point of view, I think we went in detail of some of the key attributes and highlights of CUBS, but what do you think some of the biggest challenges, the ETF might face in the emerging market space, you know, as a whole?
MP: So, I think there's obviously, [you're weighing] CUBS, I think the biggest challenge is actually attracting foreign investors back to these markets. Foreigners be net sellers in these markets for the past six years, they've generally stuck to your larger, later stage EM countries such as the BRICS, or they’ve basically stated in developed markets. And the more that's happened is that it's basically depress valuations, and as a result of foreigners sending these markets, the marginal buyer in these markets is now a local buyer no longer a foreign buyer.
I think within EM, it's quite hard to generalize across regions, but I think some of the key challenges vary from global instability in LATAM, regulatory risk in China, potential [indiscernible], potential risk in [indiscernible] Middle East, South African markets, the resurgence of COVID and parts of EM, but generally, CUBS are in a solid and much better fiscal monetary position than in , and ultimately, we believe that you know CUBS is in an exceptionally place position relative most of EM, especially EM beyond the core in [index countries].
If you think that like with EM, what is the most compelling opportunity, I think you know, the CUBS is probably the most compelling place within the EM where we see this is, I think it is the opportunity to basically invest in some of the fastest growing digitally enabled economies in the world, before foreign investors returned to these markets at historically depressed valuations, despite the resilient growth for the COVID cycle.
JC: Great, yeah. And I guess playing a little bit of devil's advocate with you, you know, what would you probably say to someone who might not be a full on believer in emerging markets, you know, they may say, EM’s rallied, you know, during the COVID pandemic, but you know, so as most things, you know, if we look at EM, say over, you know, a 10-year period, you'll see returns, you know, somewhere in that 15%, 20% range, give or take a few points, you know, when you annualize that out, you know, it's not really the stellar returns that one might think, you know, why should I invest in this now? You know, what's different today? And, you know, why should I come forward to CUBS or EM as a whole?
MP: Sure. So, I think EM has had [lacked], last four decades, and I think for a number of reasons that are understandable. But I'm not so clear that those reasons unless they are repeatable. We believe that [the lens] of EM investing should ultimately be defined not by months or quarters or years, but ultimately by decades. And that's also how we looked at our [back tester] returns. I think [indiscernible] about like your why, what are the three reasons why we've had a disappointing decade in EM?
I think one has been the strong dollar. I think there is a, you know we don’t focus on macro forecasting, but I think there's a question to market today where the dollar strength is expected to continue. We would expect that a weaker dollar should benefit emerging markets overall. I think it's important point to note that FX depreciation across emerging markets varies widely. So, for example, in Nigeria or Egypt, you've had a major FX devaluation every 5, 10 years. But if you look at the CUBS, you've actually lost less in FX since 2000 then you would have otherwise in Brazil, Russia, and India.
Now, obviously [indiscernible] has been the best form in EM currency, but it will actively manage currency. So, I'm not sure if you want to compare EM currency analysis. I think the second point in EM is that a number of EM countries, but not the CUBS are very commodity price exposed. And obviously, commodity prices have been subdued for the majority of the past decade, which has had an impact on local economic growth, but ultimately on local markets.
And you see it specifically in countries such as Brazil and Russia. And you look at the performance in the past decade and it's been a difficult decade for those countries. And then thirdly, as I mentioned before, passive investing, we don't believe works in the end, you need to find an active approach to find the best [unlike companies] and to avoid state or enterprises. I mean, to dig in [indiscernible] example, if you look at the MSCI EM index in 2010.
The top five holdings were China Mobile Petrobras, Gazprom, Samsung, and TSMC. China Mobile Petrobras and Gazprom are state-owned enterprises. In the following decade, they've returned between 0% and negative 3%. Ultimately, they were not investors you want to be associated with. Samsung, TSMC ultimately performed very well. What does it mean this shows is that you can't partner with SOEs and EM, if you're focused on generating investment returns in these markets.
I think a fourth thing to note is, a lot of these markets, as I mentioned, the next generation is simply it seemed foreigners being net sellers for the past decade. I think there's, as I said, there is [limited] capacity for further foreign selling, which also reduces the downside valuation pressure. If we look at the cultural [indiscernible] the average valuation today, if we look at that valuation today over the last year – of the 10-year average, 60% of the portfolio is below the 10-year average, I think underscores the relative valuation position of the portfolio.
The [indiscernible] buyers in these markets today are locals, foreigners have not returned yet, they will return. Ultimately, in the instruction, we think that's also a fifth law in EM investing and why we were obviously, we had lackluster returns, the [indiscernible] waiting [indiscernible] decides not to growth over returns outlook. Again, what's interesting is, if you'd basically bought the CUBS country indices in January 2000, as well as the SP 500, MSCI [indiscernible], MSCI EM, and the large index in China and India, we have actually made materially more money in CUBS than any of the aforementioned indexes after dividends in dollar terms.
Where do you get under scores, I think the opportunity to invest in the CUBS countries. And that's obviously on an index level without the active lens. And then longer-term and more broadly, I think what this also shows is, you need to be long-term in the sector [in the end]. Buying the Global Index has been an underwhelming experience for the past decade in EM. And in fact, we don't expect them to change for the outlook going forward.
JC: Awesome. Yeah. And I know, we could obviously talk about this, or at least I could talk about this all day long, I think you could as well, but we are, kind of wrapping up our podcasts and getting towards the end. And we always like to give our guests, kind of, I guess you could say the last foot, you know, anything that you want to mention, perhaps that we didn't talk about today, doesn't have to be anything specific to CUBS, it can be, but kind of wanted to get your last thoughts and also if you could share with our audience, some information about where they could find you, Dawn Global, if they want to learn more information about CUBS, you know, things of that nature as well.
MP: Sure. So, I think, well, first of all, Jason, thanks for the timing today. I think one thing on Emerging Markets to recap again, it's investing today in economies of tomorrow. By 2030, Standard Chartered expect 7 the 10 large economies in the world to be emerging market economies, which I think underscores the opportunity, but also the relevance of EM. Getting that exposure to EM today is actually very hard, especially on the diversified way. We are looking to offer that in an actively managed diversified way. Where do you find information? We [indiscernible] said people receive too many emails.
So, we focus on actually publishing our research online for our website. For social media, we participate in podcasts, webinars, other audible visual, other forms of engagement with interested parties, investors or with people who follow our research. For us, the key is on delivering sustained insights in these markets and on the products what investors want to hear, which is also I think, different from what you get from existing ETF channels. Yeah, we actually have a fact sheet, but frankly, we're focused on research driven insights in these markets that hopefully get people comfortable in the markets. And what we ultimately also include is a monthly themes report, at quarterly investment letter and also a quarterly webinar.
JC: Excellent, excellent. Well, that concludes this episode on Emerging Markets and Frontier Markets. I want to thank our guests from Dawn Global, Maurits Pot for joining us today as well as our listeners joining in. But until next time, this is your host Jason Capul signing off.
For disclosure purposes, Jason Capul is not long any ETFs discussed. Maurits Pot is long Asian Growth Cubs ETF, ticker CUBS.
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