Managing Director & Senior Partner
Global capital markets have been on a remarkable journey over the past 25 years. And BCG’s Value Creators rankings have tracked performance every step of the way. Since 1999, BCG has published annual rankings of the world’s top value creators based on total shareholder return (TSR) over the previous five-year period.
To mark the rankings’ 25th anniversary, we reviewed a quarter-century of value creation patterns across industries and regions. Our key observation: being present in attractive markets is important, but secular tailwinds alone are usually insufficient for outstanding long-term TSR performance. What sets long-term value creators apart is their ability to capitalize on favorable conditions and weather less favorable ones through innovation that differentiates their products and services. This often involves disrupting their own near-term success so that they can stay ahead of existing or potential competitors over the long run.
Before delving into our 25-year rankings, we highlight key points from the current five-year rankings detailed in our 2023 Value Creators interactive.
The current five-year rankings are based on average annual TSRs from 2018 through 2022—a period that included a wide range of market conditions.
Global capital markets achieved an average annual return of approximately 7% in this five-year period. This annualized return is consistent with long-term historical returns, despite the Q4 2018 market correction, the impact of the COVID-19 pandemic, and 2022’s inflation-driven market headwinds. However, it is notably lower than the double-digit returns achieved during the bull market that characterized most of the 2010s and extended through 2021—for example, the annualized return of the S&P Global 1200 index was 13% per year from 2011 to 2021.
The significant market headwinds in 2022 materially shifted value creation patterns across regions and industries:
While US-based companies, which are often technology-driven, stand out as the world’s most valuable firms, the five-year rankings of leading value creators (for large-cap companies and overall) have become much more diverse:
Since the first BCG Value Creators report was published, 25 years ago, global capital markets have yielded an annualized return of approximately 9%. They have delivered this strong return despite four major crises—the 2000–2001 bursting of the dot-com bubble, the 2008–2009 Great Financial Crisis, and the 2020 COVID-induced dip, and the 2022 bear market.
Across industries, the median 25-year TSR performance appears quite diverse. Top-performing sectors include health care services, fashion and luxury, fintech, software, mining, machinery, and retail. (See Exhibit 2.)
We also see several noteworthy aspects of regional performance:
The large-cap top-25 rankings for the past quarter century include several distinct groups of long-term value creators:
The returns generated by the large-cap top performers are truly impressive. Even the “weakest” of these companies returned 17% annually, resulting in a more than 50-fold increase in value over 25 years. By comparison, money invested at the overall 9% market return achieved an 8-fold increase in value over this period. These companies’ long-term outperformance is especially impressive because no company is able to beat its industry and regional benchmarks every year. (See the sidebar, “The Challenge of Consistent Value Creation.”) The companies at the top of our long-term value creators ranking have found ways to overcome the gravity that pulls most companies’ TSRs back to average.
The distinct groups of top long-term value creators highlight that there is more than one path to strong and sustainable long-term TSR. Although each of these companies was able to develop its individual path, growth was essential for success. To promote growth, long-term value creators generally draw on two key strategy drivers:
Our 25-year retrospective highlights that exceptional companies can consistently create outstanding shareholder value over time. Compelling value creation strategies have turned volatility and downturns that were catastrophic for other companies into mere bumps in the road for these perennial value creators. The next quarter century will undoubtedly feature many ups and downs in the macro-economic, business, and capital-market environments. Companies employing the right approaches to identify promising markets and stay ahead of the competition will be well-positioned for sustained long-term value creation, regardless of what the future brings.
To explore the value creators reports through the years, visit our Collection page.