August 01, 2019
Small cap stocks within emerging markets have outperformed large cap stocks (i.e., MSCI EM) by around 0.5% annualized since January 2000. However, Illiquid stocks (regardless of capitalization) have outperformed large cap stocks by around 3%. This illiquidity premium is related to, but not the same as, the small cap premium. This opportunity is all the more enticing as it sits atop emerging markets, an already attractive asset class, and offers active managers a large selection universe of approximately 2000 firms.
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