Latin Finance - July/August 2010 - 12

equity/debt fund performance

mindset that there was nothing broken in Latin America necessarily, and that once things settled down the region would again outperform,” says Will Landers, manager of BlackRock’s $8.5 billion LatAm equity funds, including the $469 million BlackRock Latin America fund, which returned 118% in the year to April 1. “We didn’t get in a very defensive position, and maintained a focus on picking best companies we thought would outperform,” says Landers of late-2008. And despite the fact that most ECM bankers say investors put a premium on liquidity, Landers says during much of the rally he held about 40% of his portfolio in small and mid-cap names. While the 2007 rally was driven more by large caps, investors who did well this time overweighted Brazil and made some good picks among the small and mid-sized companies, he adds. “The key was being big in Brazil, and having a big exposure to small and midcap names,” Landers says, citing retailers and homebuilders, including Cyrela. Fund flows fuelled the rally. EM debt funds enjoyed inflows of $28.78 billion in 12 months to April 1, according to EPFR, while Latin equity raked in $10.35 billion

during that period. From the beginning of 2010 through June 2, EM debt funds had net inflows of $22.79 billion, while LatAm equity suffered outflows of $2.99 billion, according to EPFR. In the first five months of the previous year, EM debt lost $4.43 billion while LatAm equity swallowed inflows of $5.42 billion. “Funds flows were dramatically positive for emerging markets,” says David Oliver, fixed income portfolio manager at Stone Harbor, of the recovery since spring 2009. Stone Harbor’s EM debt fund returned 44% in the year to April 1. “Also there is still a very steep yield curve and not a lot of opportunities in the developed market which still has very tight spreads. So on a funds flow perspective as well as a fundamental credit argument, the stars were aligned,” Oliver adds. However, the bull run came to a halt in April, and new issue markets shut down. From April 15 through June 14, the Bovespa had dropped 9.9%, and the Mexican bolsa had lost 5.6%, clawing back earlier losses.

Mexico Nudges Brazil

Melzi sees LatAm growth momentum unaffected through 2010, though beyond

that there are threats to medium-term recovery, mainly in policy. Mexico, whose growth lagged the likes of Brazil and Colombia, offers especially attractive prices to those confident a US rebound will lift its neighbor, he adds. “The higher the opportunity gets during the selloff the more the chances are that we are going to be either rotating from those that didn’t change much in price, or shifting from commodity names into those names,” says JPMorgan’s Carrillo. The investor adds that he is more interested in Mexico, especially since it had become difficult to find value in Brazil since mid-2009. JPMorgan sees opportunity in Mexico’s depreciating peso, which can give the country a competitive advantage over other exporters. Carrillo says he is focusing on domestic LatAm plays. He explains this is the “next stage” of growth, as more money is spent on goods and services in local economies. For his fund, these include sectors like software, insurance, retail and health care. He typically buys mid-caps with potential to compound growth over time.

Top EM Debt Funds, Year to April 1
Making the most of a rally Benchmark JPMorgan EMBI+ JPMorgan EMBI Global Diversified Lipper Emerging Market Debt Classification Average Manager GMO Aberdeen TCW BlueBay Federated RiverSource SEI Stone Harbor Fidelity JPMorgan
Source: Lipper

Launch

Size ($m)

LatAm Allocation

Total Annualized Returns (%) (%) Total Returns 1 year 3 year 5 year 27.30 30.35 38.62 6.95 7.25 7.75 5.66 7.71 13.10 NA 7.17 8.81 8.68 NA 9.51 3.61 9.42 9.12 10.24 10.71 11.49 12.13 NA 10.33 NA 11.76 NA 11.45 8.95

Fund Emerging Country Debt Fund Global - Emerging Markets Bond Emerging Markets Income Fund Emerging Market Select Bond International High Income Fund Emerging Markets Bond Fund Emerging Markets Debt Portfolio Emerging Markets Debt Fund New Markets Income Fund Emerging Markets Debt Fund 1998 2001 1998 2007 1996 2006 1997 2007 1993 1997 1,333.10 303.93 196.30 150.43 71.60 119.00 815.00 139.90 3,319.90 110.50 34.47 35.57 37.00 39.96 45.67 39.51 41.66 45.23 31.27 46.99 58.61 51.93 50.73 46.73 46.03 44.90 44.47 43.98 43.34 43.04

12 LatinFinance

July/August 2010



Latin Finance - July/August 2010

Table of Contents for the Digital Edition of Latin Finance - July/August 2010

Latin Finance - July/August 2010
Contents
Equity/Debt Fund Performance
European Investors
Brazil Domestic Buyside
Mexican Domestic Buyside
Mexico Venture Capital
CEMEX CFO Interview
Panama Investment
Canadian Miners
Peru Investor Report
Peru is Making Strides to Develop Gas and Oil
Microfinance Volume Rises at a Steady Clip
Latin Finance - July/August 2010 - Latin Finance - July/August 2010
Latin Finance - July/August 2010 - Cover2
Latin Finance - July/August 2010 - Contents
Latin Finance - July/August 2010 - 2
Latin Finance - July/August 2010 - 3
Latin Finance - July/August 2010 - 4
Latin Finance - July/August 2010 - 5
Latin Finance - July/August 2010 - 6
Latin Finance - July/August 2010 - 7
Latin Finance - July/August 2010 - 8
Latin Finance - July/August 2010 - 9
Latin Finance - July/August 2010 - Equity/Debt Fund Performance
Latin Finance - July/August 2010 - 11
Latin Finance - July/August 2010 - 12
Latin Finance - July/August 2010 - 13
Latin Finance - July/August 2010 - 14
Latin Finance - July/August 2010 - 15
Latin Finance - July/August 2010 - 16
Latin Finance - July/August 2010 - European Investors
Latin Finance - July/August 2010 - 18
Latin Finance - July/August 2010 - Brazil Domestic Buyside
Latin Finance - July/August 2010 - 20
Latin Finance - July/August 2010 - 21
Latin Finance - July/August 2010 - 22
Latin Finance - July/August 2010 - 23
Latin Finance - July/August 2010 - 24
Latin Finance - July/August 2010 - 25
Latin Finance - July/August 2010 - Mexican Domestic Buyside
Latin Finance - July/August 2010 - 27
Latin Finance - July/August 2010 - 28
Latin Finance - July/August 2010 - Mexico Venture Capital
Latin Finance - July/August 2010 - 30
Latin Finance - July/August 2010 - CEMEX CFO Interview
Latin Finance - July/August 2010 - 32
Latin Finance - July/August 2010 - 33
Latin Finance - July/August 2010 - Panama Investment
Latin Finance - July/August 2010 - 35
Latin Finance - July/August 2010 - 36
Latin Finance - July/August 2010 - 37
Latin Finance - July/August 2010 - 38
Latin Finance - July/August 2010 - Canadian Miners
Latin Finance - July/August 2010 - 40
Latin Finance - July/August 2010 - 41
Latin Finance - July/August 2010 - Peru Investor Report
Latin Finance - July/August 2010 - 43
Latin Finance - July/August 2010 - 44
Latin Finance - July/August 2010 - Peru is Making Strides to Develop Gas and Oil
Latin Finance - July/August 2010 - Microfinance Volume Rises at a Steady Clip
Latin Finance - July/August 2010 - 47
Latin Finance - July/August 2010 - 48
Latin Finance - July/August 2010 - Cover3
Latin Finance - July/August 2010 - Cover4
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