LatinFinance - May/June 2013 - 31

Equity investor scorecard

dominate their portfolio.
But the allocations go beyond simply
falling in line with the index. The
country’s low growth and lackluster
indicators may offer a potential entry
point. Christopher Palmer, director of
global emerging markets at Henderson,
says that while “Brazil is a problem” it is
“also probably a buy, because of the depth
of the problems”.
“Sometimes it’s best to invest when
things looking a bit uncertain,” he
says, adding that the administration
is now demonstrating its commitment
to addresses underlying economic
problems. “The best time to buy other
global emerging markets was when
people weren’t so sure about things: when
Colombia was emerging from the FARC
problems; Peru, when president Humala
was elected. People had a lot of concerns,
but we’ve moved on from there.”
Fidelity’s Kutas also looks for
opportunities to pick up stocks when
others take fright. His fund holds stocks

for around five years on average – trading
costs can be high and liquidity can be
tough in these markets, he says. That
contrasts with the strategy of many
crossover investors who play for quick
growth rather than long-term value.
The volatility those accounts create can
present opportunities, he says.
“I try to be cognizant of how
fundamentals and valuations look relative
to global peers and developed markets,”
says Kutas. “When these investors exit
they’re very price insensitive.”
Worries that surfaced about
Brazilian utility companies in 2012 are
one example. “That can create a lot of
downside momentum, but if you know the
companies and the fundamentals, you can
pick up stocks at fire sale prices.”
Mexico sits at the other end of the
spectrum. The best performing equity
fund managers are upbeat about the
country’s economic fundamentals.
“One can have a high degree of
confidence that Mexico will do the right

thing from an orthodox fund manager
perspective,” says Invesco’s Newman. “If
they have to take a tough decision, they
will take it.”
Still, only a fifth of his fund is invested
in Mexican stocks – compared to nearly
two thirds in Brazilian ones. That is an
underweight of the MSCI benchmark,
and reflects relative valuations. “Some
[Mexican] stocks are a bit expensive – you
have to focus hard on stock selection,”
says Newman. “In Brazil, the aggregate
market is cheap. It’s generally unloved
by international investors and sentiment
is poor. That creates an opportunity.
If valuations are cheap and sentiment
negative, it doesn’t take too much
improvement in the news to move things
the other way.”

Consumer bias

A rapidly expanding middle class has put
Latin America’s consumer sectors in favor.
Henderson’s Gartmore Latin America fund
was overweight consumer staples at the

Picking carefully

2013 equity investor scorecard
Annualized Gross Returns (%) USD
Launch

Assets
($m)

Allocated to
LatAm (%)

1 yr

3 yr

5 yr

10 yr

-20.97

-10.83

-4.33

23.50

Lipper Global Equity Emerging Markets - LatAm

-1.48

1.06

-0.84

18.57

Mexico IPC CR

15.79

9.78

4.27

20.62

MSCI EM Latin America

-4.14

0.14

0.59

23.08

Benchmark
BOVESPA (Ibovespa) CR

Manager

Fund

First State

Latin America Fund

2009

254.1

84.49

17.27

15.82

Blackrock

BSF Latin American Opportunities

2007

210.4

96.68

4.74

8.98

JP Morgan

Latin America Fund

2007

129.6

90.76

2.87

5.4

3.24

Invesco Perpetual

Latin American Fund

1994

890.0

87.4

6.74

5.36

4.02

26.38

Fidelity Funds

Latin America Fund

1994

2,408.9

93.17

2.68

5.29

5.46

25.8

Schroder

Latin America Equity

2007

118.8

96.96

4.63

5.27

Morgan Stanley

Latin American Equity

1997

883.5

96.58

2.43

3.13

1.71

23.45

Threadneedle

Latin American Fund

1997

1,347.0

90.68

-0.2

2.85

1.81

23.52

Henderson

Gartmore Latin American Fund

2004

999.6

97.93

-1.09

2.18

2.16

Manulife

Global Fund-Latin America Equity

2006

141.2

95.65

2.3

1.83

0.96

Source: Lipper
Performance data to 31 March 2013; Asset values effective 28 February 2013

May/June 2013

LatinFinance 31
LatinFinance - May/June 2013

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