LATIN AMERICAN funds provide an alternative to investors who are tempted by Brazil but who are worried about single country exposure. They are available to UK investors in the form of investment trusts, open-ended investment companies (OEICs) and SICAVs. These funds are weighted heavily towards Brazil – the MSCI EM Latin America net benchmark has 68.1 per cent exposure to the country – but they also invest in Mexico, Peru and Chile. Here we look at three Latin America funds.
BGF LATIN AMERICAN SICAV FUND
Managed by Will Landers since September 2002, this Luxembourg-domiciled fund was launched in January 1997 and now has £6.98bn in assets under management. The fund outperformed between 2005 and 2007 and again in 2009 but fell more sharply than the benchmark in 2008. It has an annual management fee of 1.75 per cent and an initial charge of 5 per cent.
Morningstar, which rates the fund as superior, says it has a high opinion of the fund and the team but says that the fund’s size may make it difficult to fully exploit opportunities in less liquid areas of the market in the future.
TEMPLETON LATIN AMERICA SICAV FUND
Launched in May 2001, this fund has been overseen by lead manager Mark Mobius but the day-to-day running of the £3.25bn in assets is down to the four locally-based LatAm managers. It has an annual charge of 1.9 per cent and an initial charge of 5 per cent. It is rated AA by S&P Fund Management Rating, which says that over the past five years, cumulatively, it ranks in the top decile. S&P notes that cash was a drag on performance in the second half of 2009. Sharp inflows at this time, when the team was finding it increasingly difficult to identify appropriately valued high-conviction ideas, meant the speed of cash deployment into the fund was somewhat slow.
THREADNEEDLE LATIN AMERICA OEIC
The performance of the fund has improved considerably since April 2009 when Julian Thompson, head of the emerging markets team, took over as fund manager, says S&P Fund Management Rating, which awards it an A. It was launched in November 1997 and now has $1.1bn in assets under management. Only Thompson focuses on the region, Threadneedle’s equity teams offset the absence of a specialist Latin America team. Since Thompson took over the daily running of the fund, it has outperformed both the peer median and benchmark, driven mainly by stock selection. For institutional investors, there is no initial charge and the annual fee is 1 per cent.