Emerging Markets Equities Investors Should Look to Small Caps to Benefit From Rise of Global Middle Class, According to The Boston Company Asset Management

BNY Mellon Investment Boutique Sees Opportunity to Tap into Domestic Consumption

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Feb 16, 2010, 07:37 ET

BOSTON & LONDON, Feb. 16 /PRNewswire-FirstCall/ -- Investors should consider small cap emerging markets stocks as a way to capitalize on the rapid growth of the global middle class, according to a recent analysis by The Boston Company Asset Management, LLC (TBCAM), part of BNY Mellon Asset Management.

"We believe this is a much better way to capture domestic growth in emerging market economies than other more popular tactics used today, such as investing in funds that are benchmarked against the MSCI Emerging Markets Index or in global multinational corporations," said Carolyn M. Kedersha, managing director and senior portfolio manager at TBCAM. "It's important to remember, however, that the emerging market small cap market is inefficient and prone to periods of volatility that require an active, stock-selection-based investment strategy."

The MSCI Emerging Markets Index is heavily weighted toward commodities and export-driven companies and offers less exposure to local consumer-driven demand, according to the TBCAM report. The report also points out that multinational corporations have diversified revenue streams and consequently are likely to reap a smaller benefit than emerging market small cap companies from the rise of domestic consumption in emerging markets.

"Our assessment is that the opportunity presented by the rise of this emerging global middle class is significant," Kedersha said. "Emerging markets are at the forefront of worldwide growth, with more than 80 percent of the world's population advancing toward parity with the developed world."

Many emerging markets countries have been investing in capital at higher rates than developed countries, the report notes. These investments are expediting modernization, which includes increased electricity generation and greater telephone access, TBCAM said. Kedersha said, "These countries are likely to see a commensurate rise in key elements of a developed economy such as a solid middle class and consumer-driven expansion."

Notes to Editors:

The Boston Company Asset Management, LLC, a BNY Mellon Asset Management investment boutique, manages more than $34 billion in assets for more than 450 clients worldwide. It provides investment management services for corporate, public, mutual funds and Taft-Hartley retirement plans, endowments and foundations.

BNY Mellon Asset Management is the umbrella organization for BNY Mellon's affiliated investment management firms and global distribution companies.

BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). BNY Mellon is a global financial services company focused on helping clients manage and service their financial assets, operating in 34 countries and serving more than 100 markets. BNY Mellon is a leading provider of financial services for institutions, corporations and high-net-worth individuals, providing superior asset management and wealth management, asset servicing, issuer services, clearing services and treasury services through a worldwide client-focused team. It has $22.3 trillion in assets under custody and administration, $1.1 trillion in assets under management, services $12.0 trillion in outstanding debt and processes global payments averaging $1.6 trillion per day. Additional information is available at www.bnymellon.com.

This press release constitutes only current opinion of TBCAM, which is subject to change. All information source BNY Mellon Asset Management as at 31/12/09. This press release is qualified for issuance in the UK and US and is for information purposes only. It does not constitute an offer or solicitation of securities or investment services or an endorsement thereof in any jurisdiction or in any circumstance in which such offer or solicitation is unlawful or not authorised. This press release is issued by BNY Mellon Asset Management (US) and BNY Mellon Asset Management International Limited (ex-US) to members of the financial press and media and the information contained herein should not be construed as investment advice. Past performance is not a guide to future performance. Registered office of BNY Mellon Asset Management International: The Bank of New York Mellon Centre, 160 Queen Victoria Street, London, EC4V 4LA. Registered in England no. 1118580. Authorised and regulated by the Financial Services Authority

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SOURCE BNY Mellon