Anders Damgaard, Portfolioverwalter des "ISI Latin America Equities" (16.06.2010): "P/E und P/B Value sind die am häufigsten verwendeten. In der Regel wird über einen Zeitraum von 3 - 4 Jahren bewertet um zu sehen, ob sich eine Kontinuität feststellen lässt." Devan Kaloo, Fondsmanager des "CS Equity (Lux) Latin America Aberdeen B" (10.06.2010): "Over the past 10 years, Latin America has made huge strides to become an important current and future contributor to global growth. A commitment to orthodox fiscal and monetary policies from governments and central banks has seen inflation fall significantly in countries such as Brazil, Chile and Mexico, creating an environment conducive to domestic growth and investment. Demand for commodities has led to trade surpluses. Tax reforms and prudent government spending policies have led to current account surpluses in many countries, and economies are now more stable and less dependent on foreign inflows of capital. Indeed, fiscal deficits (% of GDP) are lower in most cases among the region´s countries than in the Eurozone, Japan, UK and US. At the same time companies located in the region have worked hard to restructure balance sheets, reduce debt and focus on core skills, resulting in improved profitability and earnings.
While Latin America has certainly blossomed due to being the world’s leading supplier of commodities, it would be wrong to view the region purely as a play on the world’s thirst for raw materials. Of more interest to Aberdeen is the rise of domestic consumption. Growing, youthful populations with burgeoning workforces are enhancing earning and spending power in the region, and this in turn is driving domestic growth. Consequently, local retailers, banks and drinks companies are of particular appeal.
So the economic backdrop is overall healthy. However, unfortunately what is happening in Europe and elsewhere is likely to dictate market sentiment over the short-term." Lionel Bernard, Fondsmanager des "Amundi Funds Latin America Equities C C" (16.06.2010): "Latin American stocks are attractive because they represent a balanced mix of good prospects, relatively attractive valuation and improving risk profile. Latin American economies are still dependent to a certain degree on the world wide economic situation but this degree is getting less important as internal demand is growing, especially in Brazil. Besides strong macroeconomic fundamentals, Latin America is offering an attractive valuation: indeed, P/E for next 12 months is at 10 while it is at 11 for Emerging Asia and 12 for MSCI World (developed markets). Finally, as a result of increasing risk on sovereign debt in developed Europe, financials markets now consider Brazil, Mexico and Chile as less risky than Greece, Spain, Portugal and even Italy."
Dr. Mark Mobius, Fondsmanager des "Templeton Latin America A (Ydis) USD" (14.06.2010): "Langfristig beurteilen wir Lateinamerika aus mehreren Gründen positiv. Unseres Erachtens verzeichnen viele latein-amerikanische Länder im Vergleich zu Industrieländern stärkeres Wirtschaftswachstum, verfügen über beträchtliche Rohstoffvorkommen und sind finanziell durch niedrigere Verschuldungsquoten, höhere Devisenreserven und schwindende Abhängigkeit von den entwickelten Märkten besser aufgestellt. Infolgedessen erleben wir, wie das Vertrauen in Lateinamerika zunimmt und der Markt entsprechend anzieht."
Chris Palmer, Fondsmanager des "Gartmore SICAV Latin American EUR A" (16.06.2010): "In the current market environment where growth in the region is balanced against
global uncertainty, there are a number of facts which we regard as being relevant:
• US & Chinese economic performance
• Outlook for earnings and expected earnings growth rate
• GDP growth expectations versus previous years, and trend
• Industrial production trends
• Risk aversion in global markets
• Export demand
• Trends in consumption
• Sovereign debts levels
• Employment trends
• Automobile sales."
Alex Duffy & Angel Ortiz, Co-Manager des "Fidelity Funds - Latin America A USD" (16.06.2010): "Valuations in the region have re-rated. Identifying those stocks which have the ability to grow earnings and relative earnings will be key to unlocking performance potential in the next 12 to 18 months. Going forward, we continue to see a number of attractive opportunities in companies set to benefit from Latin American domestic penetration growth across the entire spectrum of the market. As a consequence, we are expecting to add to existing positions in these names and increase the size of bets as visibility improves and our conviction grows."
Alexandra Vanhuyse, Fondsmanagerin des "KBC Equity Latin America Acc" (14.06.2010):
"• Global stock market: degree of risk aversion & volatility
• Foreign fund flows: have been negative into Brazil for most part of the year but are starting to turn around => can this be sustained?
• Chinese growth & demand for LatAm exports (e.g. iron ore)
• Inflationary pressures (e.g. Brazil): is the Central Bank taking sufficient measures to curb these?
• Interest rate cycle: on both sides: will tightening be strong enough to curb inflation and will it not be too tight to choke off economic recovery?
• Top down GDP forecasts & bottom up earnings forecasts: room for further upgrades? / drivers of GDP growth: domestically driven or export-demand driven?
• Valuation argument: becoming compelling again given relatively weak performance year to date and scope of earnings upgrades."
#imgr(19=#Eric Anderson, Portfoliomanager des "ING (L) Invest Latin America" (16.06.2010): "After years of progress on regulatory reform and macroeconomic restructuring, the economic fundamentals of the main Latin American countries, namely Brazil, Chile, Colombia, Mexico and Peru are healthier than ever before. Levels of debt are low, fiscal deficits are small and economies are underleveraged. GDP growth is very strong being driven by robust growth in domestic demand and rising exports and this is translating into strong company earnings. Together with valuations that look relatively attractive following the recent Europe sovereign debt induced market correction, we believe that Latin American equities currently represent an attractive investment opportunity."
Jan Nellemann, Fondsmanager des "Jyske Invest Latin American Equities" (16.06.2010): "From an overall perspective economic growth plays an important role as revenue and earnings growth normally is easier to achieve in an economic growth environment. We are thus looking for companies with revenue and earnings momentum, which are still cheap. Another thing of great importance is the overall market perception of risk. As the Latin American markets are still perceived as being more risky, though growth is high and debt ratios typically are low."
e-fundresearch: "Wie interpretieren Sie diese relevanten Kennzahlen und wie schätzen Sie die Marktentwicklung für lateinamerikanische Aktien in den nächsten 6-12 Monaten ein?"
Anders Damgaard, Portfolioverwalter des "ISI Latin America Equities" (16.06.2010): "Nach unserer Auffassung ist die Preisfestsetzung für Mexiko und auch Brasilien fair. Brasilien war früher generell ein preiswerterer Markt, aber umfassende Aktienankäufe aus dem Ausland führten im vergangenen Jahr zu erheblichen Kurssteigerungen, so dass der brasilianische Markt nicht mehr als preiswert eingestuft werden kann. Unsere Einschätzung von Brasilien und Mexiko ist für die nächsten 6 - 12 Monate relativ positiv. Die Performance des brasilianischen Marktes lag in diesem Jahr geringfügig unter dem des mexikanischen. Dies ist zurückzuführen auf 1) Gewinnentnahmen bei Aktien und Währung, 2) zwei Leitzinserhöhungen - weitere sind zu erwarten, 3) die Rohstoffe gerieten ebenfalls aufgrund der Straffungen in China und den Problemen in Europa leicht unter Druck. Mexiko hat von einer der verhältnismäßig stabilen US-Wirtschaft profitiert. Zudem sind die Lohnunterschiede zwischen Mexiko und China mittlerweil weniger ausgeprägt (das Lohnniveau in China bewegt sich rapide nach oben). Damit wird es noch attraktiver, aus den USA nach Mexiko statt nach China outzusourcen."
Devan Kaloo, Fondsmanager des "CS Equity (Lux) Latin America Aberdeen B" (10.06.2010): "Our focus is on identifying good quality companies, investing in them at the right price and holding them for the long-term. Consequently short-term stock market fluctuations are only of interest if they allows to buy more of our favour companies at a cheaper price. Once market sentiment has settled down, we believe LatAm equities will perform well."
Lionel Bernard, Fondsmanager des "Amundi Funds Latin America Equities C C" (16.06.2010): "Thanks to its strong macro fundamentals and to a robust economic recovery, Latin America should be one of the outperformers in the next 6 to 12 months. We expect Brazil as the clear favorite in the region since it should benefit from positive commodity markets and growing internal demand relying both on improving private consumption and government spending on infrastructures and on household support."
Dr. Mark Mobius, Fondsmanager des "Templeton Latin America A (Ydis) USD" (14.06.2010): "Wir gehen davon aus, dass die lateinamerikanischen Märkte 2010 weiter zulegen könnten, wenn auch vielleicht nicht so stark wie 2009. Im Zuge dieser Entwicklung sind allerdings Korrekturen möglich. Wir rechnen jedoch mit solchen Korrekturen und versuchen, sie zu nutzen, um Positionen zu eröffnen oder aufzustocken, die unseres Erachtens unwiderstehlich günstig bewertet sind. Die Bewertungen liegen derzeit offenbar etwa in der Mitte ihrer historischen Bandbreite, sodass wir immer noch Chancen entdecken.
Während Sorgen um die Finanzprobleme Griechenlands auf mehreren globalen Märkten Korrekturen auslösten, beurteilen wir die lateinamerikanischen Märkte aus verschiedenen Gründen langfristig nach wie vor positiv. Das Wirtschaftswachstum in Mittel- und Südamerika dürfte höher ausfallen als in den Industrieländern. Wir rechnen für 2010 mit 4,0% gegenüber 2,3% in den Industrieländern. Mehrere Volkswirtschaften preschen vor, darunter Peru, Brasilien und Chile, die 2010 jeweils 6,3%, 5,5% bzw. 4,7% zulegen dürften. (Quelle: Internationaler Währungsfonds, World Economic Outlook, April 2010)"
Chris Palmer, Fondsmanager des "Gartmore SICAV Latin American EUR A" (16.06.2010): "Our country positions reflect exposure to identified macro and micro-related thematics. The Fund’s Brazilian overweight is constrained by UCITS limits on Petrobras and Vale. Our Mexican overweight reflects our confidence in the economic turnaround linked to the US recovery. The Fund’s underweight in Chile is due to high valuations in banking and consumer shares.
We expect Latin America will enjoy a high rate of economic growth in 2010. Mexico should see a recovery in 2010 in exports and construction whilst Brazil should see a robust recovery hampered only by low rates of private capital investment and capacity limitations. Chile should get a boost from ‘earthquake recovery’ spending. We are experiencing a situation of falling risk aversion particularly when compared to risk aversion in many other credit markets. Latin America market debt spreads remain highly influenced by the developed market / high yield crisis. Local debt markets are more indicative of credit availability. The mobilisation of domestic savings, government resources and IMF “backstop” plans are a key to long term funding strategy. Brazil, Mexico, Chile and Peru all remain at substantial discounts to risky Venezuela.
In Brazil, Inflation has dropped sharply over past five years and the country is enjoying its lowest real and nominal interest rates in history. Domestic demand and investment should be supported by monetary policy and high domestic liquidity and as a result, we expect cars, housing and retail all to benefit. Brazil iron ore export volumes have recovered to levels close to those of 2008. However, project delays, ore quality problems, logistics and a lack of finance have hampered proposed expansions. China demand has been driving global demand growth resulting in the iron ore price more than doubling in the last twelve months.
The global demand for Brazilian goods has been increasing for the past seven years. China has now become a significant importer of Brazilian goods and OECD demand is once again expanding. Foreign direct investment by China and India in Brazil bodes well for further trade flows.
The public debt rose sharply in the late ’90s as Brazil financed a current account deficit and banking system recapitalisation. Debt levels are now finding equilibrium as interest rates collapse. The stability that we have witnessed since 2002 has been mirrored by strong performance in domestic equity and bond markets.
Brazilian automobile sales and new registrations are a good indication of household income levels and sentiment. The automobile industry remains a key driver for Sao Paulo state’s enormous economy. Brazil’s automobile industry is vertically integrated, enabling the development of a wide range of supplier industries.
Mexico’s formal unemployment peaked in 2009. Strong trade and manufacturing links to the United States was both the key culprit and the key opportunity. The picture is now improving and the combination of effective devaluation and lower real interest rates should help the situation.
Mexican Inflation has peaked and is expected to remain stable as monetary policy in Mexico remains orthodox and unencumbered by bank bailouts or quantitative easing. We expect interest rates to stabilise at these levels."
Alex Duffy & Angel Ortiz, Co-Manager des "Fidelity Funds - Latin America A USD" (16.06.2010): "The fact remains that it is very unlikely we will return to the debt fuelled consumption trends seen in the decade pre-credit crisis. Moving forward, those countries which did not participate in the debt bubble, maintain healthy, well managed financial systems, strong foreign exchange reserves and benign demographics, appear to be in a more attractive position for sustained economic growth than those who still have to face the fallout of the economic crisis, budget deficits and the process of deleveraging. Domestic consumption in Brazil remains robust. The domestic macroeconomic picture is compelling, fuelled by a rapid decline in real interest rates, inflation and the opening up of credit markets to an underleveraged consumer, in under penetrated sectors."
Eric Anderson, Portfoliomanager des "ING (L) Invest Latin America" (16.06.2010): "Given our view of a modest recovery in the global economy where China avoids a hard landing, we believe the potential for strong equity gains over the next 6 to 12 months is good. Business conditions in Brazil are booming, Mexico is experiencing a very strong cyclical recovery after the deep recession last year and Chilean growth is rebounding following the February 2010 earthquake and the ensuing reconstruction spending. Growth is also accelerating in Peru and Colombia. The key growth drivers around the region are centered around the rapid development of the middle class which is being driven by rising employment and consumer income gains and exports of commodity based products to China and the other emerging markets."
Jan Nellemann, Fondsmanager des "Jyske Invest Latin American Equities" (16.06.2010): "As the western world is still struggling with a very high debt level issues and the market in general is not totally convinced that the western world will be able to sustain the current growth expectations the overall risk perception will continue to play a bigger role in the market. But with the current growth outlook for the Latin American region, there is a great possibility that we will see the Latin American equity markets going higher in a 6-12 month time horizon."
e-fundresearch: "Welche Über- und Untergewichtungen sind derzeit im Fonds umgesetzt?"
Anders Damgaard, Portfolioverwalter des "ISI Latin America Equities" (16.06.2010): "Wir sind zurzeit untergewichtet, was Rohstoffe (materials) betrifft. Langfristig sehen wir den Sektor weiterhin positiv; wir erwarten jedoch ein geringes Wachstum in Europa und sind der Auffassung, dass die chinesische Wirtschaft allmählich weniger Rohstoffe erfordern wird. Also weiterhin ein steigender Verbrauch an Rohstoffen weltweit, aber mit geringerem Auftrieb. Eine weitere Untergewichtung besteht bei Energie. Dies ist auf eine Untergewichtung von Petrobras zurückzuführen. Nach unserer Auffassung zeichnet sich Unsicherheit in Verbindung mit der Finanzierung von Tiefsee-Bohrungen und die damit verbundenen Kosten ab. Wir halten ein Übergewicht an Aktien, die mit dem Binnenkonsum verbunden sind. Wir sind genau wie bei den meisten anderen Schwellenländern der Auffassung, dass zukünftig der Binnenkonsum die Wirtschaften ankurbeln wird. Diese Einschätzung basiert auf dem Aufstieg einer schnell wachsenden, kaufkräftigen Mittelschicht. Wir halten ein Übergewicht von Brasilien (71 % gegen 67 % der Benchmark). Wir halten eine kleine Übergewichtung von Mexiko und eine Untergewichtung aller anderen lateinamerikanischen Länder."
Devan Kaloo, Fondsmanager des "CS Equity (Lux) Latin America Aberdeen B" (10.06.2010): "As bottom-up stock pickers, our sector allocations are driven by where we can find quality companies with attractive valuations. This style may lead to significant deviations from the index.
Consumer Staples – we are overweight the sector based on our optimism over the growing domestic demand story. We believe that emerging economies will become more domestically driven and less reliant on exports.
Industrials – we are overweight this sector as there are numerous attractively-priced companies that have healthy business models, good management and, in many cases, are beneficiaries of domestic or regional economic growth.
Materials – we remain wary of the sector, where businesses tend to be cyclical and do not fit in with our long-term, steady growth investment style.
Utilities – while it is a relatively defensive sector, it generally involves more regulatory risk."
Lionel Bernard, Fondsmanager des "Amundi Funds Latin America Equities C C" (16.06.2010): "We have under- and overweight’s on three different levels:
a) country-level: Brazil is our largest overweight’s while Chile represent the largest underweight.
b) sector-level: Materials and discretionary consumption (home builders actually) being the largest overweights, while industrials, consumer staples and utilities have become the most important underweights.
c) stock-level: we favour stocks coming from the area of materials (copper), retail, real estate and some energy stocks. Our underweight’s are on some stocks related to materials like cement, iron ore or steel producers and some other stocks in telecoms or industrials."
Dr. Mark Mobius, Fondsmanager des "Templeton Latin America A (Ydis) USD" (14.06.2010): "Per Ende April 2010 sind wir mit dem Templeton Latin America Fund untergewichtet in Mexiko (-6,1%) und in Brasilien (-3,3%) sowie in der Energie-Branche (-5,7%).
Übergewichtet sind wir in Peru (+3,2%) sowie in den Branchen Lebensmittel, Getränke & Tabak (+8%) und Transportwesen (+5,5%)."
Chris Palmer, Fondsmanager des "Gartmore SICAV Latin American EUR A" (16.06.2010):
Alex Duffy & Angel Ortiz, Co-Manager des "Fidelity Funds - Latin America A USD" (16.06.2010): "The fund is positioned to gain the maximum benefit from domestic growth within the key economies of the Latin American region while at the same time identifying commodity producers or energy providers that have key competitive advantages which translates into pricing power or margin flexibility.
We are overweight in Brazil and Mexico, as these are key markets in which we believe domestic consumption growth will play out leading not just to greater demand for more discretionary products but development of housing, infrastructure, wireless communications and transport. We therefore have exposure to ICA, Mexico’s largest construction company and the leading Brazilian homebuilder MRV as well as discretionary goods producers such as the high-quality, defensive Brazilian beverage company Ambev.
We are overweight financials with particular emphasis on companies in dominant market positions that will draw substantial benefit from increased consumer and corporate loan growth. The Brazilian commercial bank Itau Unibanco and micro-credit company Banco Compartamos are both key positions within the portfolio. At a country level, although we are currently underweight Chile and Colombia, both positions are a result of bottom-up stock picking. We also hold positions in companies listed outside Latin America which have operations or derive the majority of revenues from the region."
Alexandra Vanhuyse, Fondsmanagerin des "KBC Equity Latin America Acc" (14.06.2010): "The fund is currently pretty neutral when looking at country allocation, with the biggest active position on a country level being max 50 bps.
From a sector perspective, we have some bets in Utilities and Banks (overweight) and Capital Goods & Food & Staples Retailing (underweight)."
Eric Anderson, Portfoliomanager des "ING (L) Invest Latin America" (16.06.2010): "Over the course of the first quarter we favored Mexican stocks over Brazilian ones believing that the cyclical recovery in Mexico was being underappreciated by the market and that Brazilian equities would struggle as the Brazilian central bank began to hike interest rates and as commodity prices weakened on China growth concerns. Through May 2010 the MSCI Mexico index outperformed the MSCI Brazil index by 12% so our positioning yielded outperformance. During the recent market correction however, with Brazil down over 11% and Mexico up 1% year to date through May, we increased positions in Brazil moving back to a neutral weight by investing in financials and commodity stocks that had fallen to very attractive levels. We maintain our overweight position in Mexico. Mexico continues to benefit from the broadening out of the recovery in the US and we believe the market continues to be attractively valued in spite of its recent outperformance. In Chile, we reduced positions in defensive names to fund the purchases in Brazil and now Chile is our largest country underweight. At the sector level, we hold a modest overweight position in the energy and financial sectors and an underweight in consumer staples. It is important to point out that our primary alpha driver is stock selection while country and sector selection are secondary sources of alpha."
Jan Nellemann, Fondsmanager des "Jyske Invest Latin American Equities" (16.06.2010): "As our investment process VAMOS is a bottom up approach our over- and underweights is a result of picking stocks we see as interesting from a VAluation perspective and were we find earnings and price MOmentum and with a certain amount of economic Strength. The result of this approach is, that we currently have an overweight in sectors like commodities and telecoms and underweight Energy and IT."
e-fundresearch: "Bitte kommentieren Sie die Performance- und Risikokennzahlen Ihres Fonds im laufenden Jahr und in den letzten 3 bzw. 5 Jahren."
Anders Damgaard, Portfolioverwalter des "ISI Latin America Equities" (16.06.2010):
Devan Kaloo, Fondsmanager des "CS Equity (Lux) Latin America Aberdeen B" (10.06.2010): "Aberdeen´s Global Emerging Markets team took over the management of the Fund on 1 July 2009. Understandably we can not comment on its performance before that date. Over the 11 months to 31 May, the Fund has returned 38.1% outperforming both the benchmark (30%) and the peer group (28%).
When we took over the management of Fund the number of holdings was over 100. The team restructured the portfolio aligning it with our model LatAm portfolio of 36 stocks. This is constructed through Aberdeen´s highly regarded investment approach. The team’s bottom-up investment process begins with a few basic rules: never invest in companies we haven´t visited; never feel obliged to buy a stock because it appears we should (for reasons of size or perceived value as a market proxy, say). Team members conduct hundreds of company visits per year then duly document these meetings and undertake rigorous analysis of the business model.
We avoid businesses we don´t understand or ones with discriminatory shareholder structures. Working from these precepts, stocks become almost self-selecting (provided we have done the essential investigative work). The more difficult decision is how much to pay. Here we place little value in ephemeral events or market ´noise´ and more on factors that will ensure we can add value in a demonstrable and consistent way over time. Our focus therefore is on long-term returns rather than short-term gains.
The main risk to us is of buying a poor quality company or one that is over-priced. We therefore seek to know our holdings thoroughly, being careful not to overpay. We view stock risk in absolute terms. Traditional diversification is the key means to control market risk. The Fund obviously benefitted from the rally in equity markets last year and our focus on quality has meant the Fund has outperformed during the current market volatility."
Lionel Bernard, Fondsmanager des "Amundi Funds Latin America Equities C C" (16.06.2010): "The fund is this year pretty much in line with its benchmark. The evolution of the market is still driven to a certain extent by the risk appetite of foreign investors, who still tend to partly redeem their money as soon as it starts to become shaky in the markets. Therefore, volatility is high YTD. Last years, Latin America economies have been reasonably affected by the financial crisis: Brazil has been the last emerging country to enter the crisis and has also been the first to exit the crisis. This should be the most important element taken into account by investors.
Due to our broadly diversified portfolio, the three levels of alpha that we have and our GARP style, we feel well positioned for different market phases. Our approach lead to a continuous outperformance versus the market in nearly all market phases seeing the fund strongly ahead of the benchmark over 3 and 5 years."
Chris Palmer, Fondsmanager des "Gartmore SICAV Latin American EUR A" (16.06.2010): "The Fund remains highly regarded amongst its peers having been awarded a 3 star rating from Morningstar, AAA from Standard & Poors and AA rating from OBSR (as at 31/03/2010).
Year-to-date: The Fund was ranked in the second quartile. Key contributors to performance include overweights in Mexichem, Lojas Renner and Hypermarcas. Mexichem has made a number of successful acquisitions and has spare financial
capacity to continue this strategy. We expect the company to benefit as China becomes a net importer of fluorinated products which should provide support to global prices. Brazilian clothing retailer, Lojas Renner moved higher as the company closed the first quarter of the year with very positive results in contrast to the same period in 2009. Hypermarcas, the largest Brazilian multibrand consumer goods maker, rose strongly over the month after selling USD $674 million worth of stock, raising funds for takeovers.
The main detractors from performance were our overweight positions in the Mexican retailer Grupo Famsa, London-listed Chilean copper miner Antofagasta and Brazilian miner Vale. Shares in Grupo Famsa fell after the company reported a weaker-than-expected operating performance in the fourth quarter. However, Famsa’s Mexican sales were stable and management is targeting improved profitability in 2010. Antofagasta drifted lower following an extended period of good performance and results in January that contained few surprises. Antofagasta is a low-cost producer with some of the world’s most prolific mines. In our view, copper prices and volumes have the potential to expand rapidly this year as the global economy recovers. Brazilian mining giant Vale announced that first-quarter net earnings slipped on higher financial and operating expenses and lower revenues. This signalled that the company has not yet benefited from a new iron ore pricing system, moving from contract to spot pricing.
3 years: The Fund was ranked in the top quartile over 3 years. Key contributors to performance were underweight positions in Chile and Argentina. At a sector level, the Fund benefited from overweight positions in Consumer Discretionary, Utilities and Information Technology. At a stock level, the top 5 performers were overweights in Aes Tiete, Cia Bras De Distr., Quimica Y Minera and Cyrela and an underweight in Telefonos De Mexico.
5 years: The Fund was ranked in the top quartile over 5 years. Key contributors to performance were underweight positions in Chile and Argentina and an overweight in Mexico. At a sector level, the Fund benefited from an underweight position in Telecommunications and Consumer Staples and an overweight in Consumer Discretionary. At a stock level, the top 5 performers were overweights in America Telecom, Lojas Renner, Aes Tiete, Cyrela and an underweight in Telefonos De
Alex Duffy & Angel Ortiz, Co-Manager des "Fidelity Funds - Latin America A USD" (16.06.2010): "The fund has outperformed the benchmark MSCI Emerging Markets Latin America Index Blend over the last year since we have taking the helm of. We are confident and excited about the opportunities the region has to offer as it enters the next stage of development."
Alexandra Vanhuyse, Fondsmanagerin des "KBC Equity Latin America Acc" (14.06.2010): "In terms of risk parameters, the tracking error of the fund versus its benchmark MSCI Latin America is approximately 0.7 while the beta is 1. In terms of style exposures, we have a positive bias towards value and size at the moment.
Detailed fund comments of past 3 years:
In 2009 the fund has gained roughly 94% in euro-terms, recovering its loss of 2008 and ending the year at an all time high.
The fund invested in the following markets with approximately the accompanying proportions at year end: Brazil (70%), Mexico (20%), Chile (5%), Argentina (1%), Peru (3%), Venezuela (1%) and Colombia (1%). If extreme volatility was the key description for Latin America over 2008, then “rally” should be the key word of 2009. There were only 2 months in which the fund lost some of its value, gaining over 5% on 8 occasions and over 10% in 2. Looking at individual country performance over 2009, not one country gained less than 50% over the year, with Brazil being the absolute top performer with a gain over 120%, while Mexico ranked among the weakest, gaining a “mere” 56%.
Looking at Brazil, the year started off on a rather poor note from a macro economic perspective. Nearly all figures released for November and December of 2008 showed a sharp deterioration in activity levels, with among others Industrial Production posting a 14% year on year decline in December following a 6.2% decline in November, well below consensus expectations, and retail sales contracting substantially. In an attempt to underpin the economy, the Monetary Policy Committee, also known as COPOM, surprised the market with a 100 base point reduction in the official interest rate Selic in January and has continued to do so on 4 more occasions, setting the Selic at the end of July at 8.75%, a new historic low, and keeping it unchanged ever since. The government also announced a series of stimulus measures throughout the first half of 2009, including some form of temporary tax reduction on car sales and a relief package amongst others targeted at the building material companies. Gradually, more and more data points suggested that the Brazilian economy had bottomed out in Q1 of 2009, making the economic contraction a short and sharp one, with the recovery being led by sound domestic demand. Industrial Production numbers started to pick up, producer confidence had been rising steadily for a number of consecutive month while news from the consumer side had been equally positive. September marked a pretty solid month for Brazil, as an upgrade by Moody’s to investment grade and the announcement of Brazil’s winning tender for the 2016 Olympics, continued to impress investors positively. Although the Olympics are not an imminent event, it should give an additional support to the Brazilian economy on the back of higher infrastructure spend, being said at 11 billion US$, on amongst other airport renovation and other transportation projects. Lastly 2009 was a year of political and strategic reorganization as the country prepares for general elections in October of 2010. Up for renewal are the Presidency, All Chamber of Deputies seats and 54 of the Federal Senate seats, marking a pivotal election after 8 years of President Lula, who, barring constitutional reform, will not be in the running.
From a sector perspective, among the weakest performers were the Utilities, Capital Goods, principally Embrear, and Telecommunication Services industries, albeit that “weakest” is relative given that they have risen by at least 50% over the year. On the other hand, Consumer Durables & Apparel, notably the homebuilders Cyrela, Gafisa and MRV Engenharia, Diversified Financials, particularly the Brazilian stock & futures exchange BM&F Bovespa and Food & Staples Retailing, being Group Pao de Acucar active in supermarkets, rank among the best performing industries, rising by respectively 275%, 190% and 175%.
With respect to Mexico, the country suffered from a severe cyclical slowdown in 2009 on the back of amongst others its heavy links with the US economy, which accounts for 80% of Mexican exports, and the H1N1 flu scare. Macro economic data continued to deteriorate throughout the year, GDP growth was revised down sharply, family remittances from the US contracted by nearly 25% and due to concerns on the country’s fiscal accounts and large dependency on oil revenues, the outlook for the long term sovereign debt rating of Mexico by the one of the 2 major rating agencies, S&P, was downgraded to “negative” on the 12th of May and has later resulted in a December downgrade by a notch to the rating “BBB”, keeping the country at investment grade and changing the outlook to “Stable”.
At year end, the best performing sectors were the Materials and Financials, while Consumer Discretionary and the likes of Telmex and Carso Global Telecom were among the weakest performers.
In 2008 the fund depreciated by roughly 48% in euro-terms while the MSCI Latin American Index fared slightly worse and lost about 50%. With this performance, the fund lagged against the broad market MSCI World by about 10% for the full year.
The fund invested in the following markets with approximately the accompanying proportions at year end: Brazil (63%), Mexico (25%), Chile (6%), Argentina (1%), Peru (3%), Venezuela (1%) and Colombia (1%). Overall key word for 2008 was extreme market volatility. By the third week in January 2008, the Latin American benchmark had fallen 20.6% only to recover and rally until the end of May when MSCI Latin America set a new record high of almost 5,200, mostly on the back of the continued rise in commodity prices. Additionally, the new risk profile of the region was validated by a milestone investment grade rating for Brazil, while Mexico proved resilient to the weakness of the US economy, two issues that, in Latin America, helped offset the weaknesses of global markets. This performance stood in contrast to all the major world indices which had a negative return so far for the year. Overall, through the end of August, the Latin American Index was about 7% ahead of the broad market index. However, things took a dramatic turn over September and October, when the VIX-Index, an often sited measure for market volatility, reached new highs and investor’s risk appetite vanished completely, causing substantial outflows out of the high Beta Emerging Market markets and MSCI Latin America underperformed by respectively 8 and 14% against the broad market. During November and December, the fund performed in line with the broad market.
Looking at individual country performance over 2008, all lost over 20% of their market cap, with Colombia being the best performer with a loss of roughly 22% while Brazil stands out at the absolute laggard, falling by over 50% when measured in euro-terms.
Colombia benefited for once from the capital controls that were adopted to restrict foreign investment flows, making it much less subject to downward pressures on the back of liquidation of funds. The Central Bank of Colombia was also the first country in the region to ease monetary policy, surprising the market by a 50 base point cut mid December.
The poor performance of Brazil, accounting for over 60% of the fund, was particularly visible as of July, when oil prices started to correct sharply. Given the disproportionate heavyweight of Energy stocks in that country, Brazil sold off heavily and has underperformed in the region of every single month since, albeit that the relative underperformance moderated significantly in November and December. From a macro-economic perspective, Brazil has held up relatively well in 2008. At the end of April, Standard & Poor’s became the first ratings agency to upgrade Brazilian debt to investment grade, assigning its long term foreign currency debt a rating of BBB-. This was followed in May when Fitch became the second ratings agency to upgrade Brazilian debt to investment grade due to a “dramatic improvement in Brazil’s external and public sector balance sheet.” This is important as two investment grade ratings are needed for a country to enter an investment grade bond index. With regards to inflation, the reported figures throughout the entire year came in above the official inflation target of 4.5%. This incited the COPOM (the Brazilian Central Bank interest rate setting committee) to raise the Selic rate on 4 occasions, twice by 50 base points in April and June only to accelerate to two hikes of 75 base points in July and September. GDP numbers released to date have surprised positively with the latest reading for Q3 2008 even ahead of the highest estimate in the market. However, these figures are backward looking and more recent industrial production and private consumption data call for a more cautious stance on the health of the overall economy going into 2009. Lastly, the Brazilian Real ended 2008 with 2 terrible quarters in which the currency depreciated by respectively 11 and 15% against the euro, which is partly accountable for the overall poor performance of Brazil within the region.
At the end of June, we had advised to take a more cautious stance on the Latin American equities. We feared that increased concerns regarding global growth and inflation could lead to further significant divestitures from emerging market funds, as investors tend to seek more traditional safe haven investments in such environments. This theory proved to be true during the second half of 2008.
In 2007 the fund appreciated 35% while the MSCI Latin American Index was up 35.6% thus reaching new historical highs.
The fund invested in the following markets with approximately the accompanying proportions: Brazil (65%), Mexico (22%), Chile (6%), Argentina (3%), Peru (3%) and Colombia (1%).
Over year 2007 the Latin American economies continued to benefit from a clearly favourable external environment, both in terms of the growth of the world economy, and of financing and market-access conditions. Against the background of the ongoing firming of domestic demand and further improvements in the terms of trade, activity in the region quickened in 2007 to an expected annual average growth rate of approximately 4.5%. 2007 was expected to be the fourth year running in which the expansion exceeded 4%, after an annual growth rate of only 2.2% between 1980 and 2002. Along with the increasing prices of commodities, on which regional exports are so dependent, several other factors such as such as growing investor and consumer confidence after several years of sustained growth, real interest rates that remained relatively low despite recent hikes in many countries, a stronger boost to public spending, an expansion in total wages driven by rising employment and a modest upturn in real wages, have helped to make domestic demand into an additional engine for growth. Despite the strong fundamentals in the region, the markets remain diverse and very volatile. There were 4 separate corrections of at least 10% in Latin America during 2007. As a result of the Sub-Prime Crisis in the US in the summer, the Latin American market depreciated over 20% in three weeks showing that despite strong and growing domestic demand, the region is not isolated from the US or the rest of the world.
2007 has been a very good year for most Latin American stock markets. The best performing market by far was Peru, which has grown by 86% in 2007. Peru has benefited from the mounting Chinese demand over the past few years for raw materials and increases in commodity prices. Brazil which makes up the largest proportion of the fund outperformed MSCI Latin America, returning almost 62%. Brazil’s economy is in very robust shape with strong growth, falling interest rates, inflation under control and both strong domestic and international demand. The second biggest market for the fund is Mexico, which underperformed MSCI Latin America, appreciating just 10%. Retail was a weak performer in Mexico, and the industry heavyweight, Walmex, was down 20% which contributed to the underperformance of the market. Chile, which also underperformed MSCI Latin America returning 20% for the year, appears to have let inflation get out of control as it has hit almost 8%. The Colombian market rose 12% for year, which given the capital controls in place and the resulting lack of liquidity in the market is a relatively good performance."
Eric Anderson, Portfoliomanager des "ING (L) Invest Latin America" (16.06.2010): "Through the end of April the Latin America 10/40 Equity Index had a negative return of 6.4% while the net return of the fund was -6.0%. We are currently running an active share of 70% which indicates that we are managing the fund quite actively. However, since ex-post tracking error is modest at just under 4%, our active positions appear to be well diversified. In addition to regulatory investment guidelines we use internal guidelines to control risk. These guidelines are designed to ensure that excessive risk is not taken. Our targeted tracking error is between 3 and 8%."
Jan Nellemann, Fondsmanager des "Jyske Invest Latin American Equities" (16.06.2010): "In the last 18 month or so we have been operating the fund with a lower than normal tracking error due to the increased overall market risk. That has unfortunately lead to an underperformance of 1,7%-points in 2010 with an absolute return of –8,12% as at the end of May 2010. In a 3 and 5 year perspective the portfolio has given a return of 5,89% and 168,67% respectively. Since the start up in 1999 the annualised return is 15,62%."
e-fundresearch: "Welches besondere Marktpotenzial und welche Risiken gibt es derzeit in der Region Lateinamerika?"
Anders Damgaard, Portfolioverwalter des "ISI Latin America Equities" (16.06.2010): "Wie bereits erwähnt, sind wir, was Lateinamerika betrifft, verhältnismäßig positiv. Ein inländisches Wirtschaftswachstum und ein expansiver Handel zwischen den Schwellenländern sind positive Faktoren. Neue Probleme in Südeuropa könnten jedoch einen negativen Einfluss haben, der aber wahrscheinlich nicht anhalten würde. Eine erneute Schwächung der amerikanischen Wirtschaft im Herbst könnte den Markt ebenfalls beeinflussen. Dahingegen meinen wird, dass der chinesischen Wirtschaft eine weiche Landung gelingen wird, und von der Seite keine negativen Einflüsse zu erwarten sind. Zukünftige Leitzinserhöhungen in Brasilien sind nach unserer Auffassung bereits größtenteils im Aktienkursniveau eingepreist."
Devan Kaloo, Fondsmanager des "CS Equity (Lux) Latin America Aberdeen B" (10.06.2010): "Europe’s debt crisis has generated global concerns about the safety of sovereign debt and depressed global markets. While the Eurozone’s massive rescue package may have staved off an immediate liquidity and default crisis, the stark austerity measures needed to support the more fiscally-challenged EU countries may dampen global economic growth via a decline in external demand. Latin America will not be immune if the global economy suffers a double-dip, but the region appears well able to absorb the impact of another recession in view of its strong financial footing and supportive demographics.
Within the region attention will likely be trained on policy action in the near term to stem inflationary fears. This week Brazil´s central bank raised interest rates by 0.75% to 10.25%, the second three-quarter point rise over the past six weeks. Brazil’s economy expanded by 2.7 per cent in the first quarter which is much faster than what many economists consider to be the potential, or non-inflationary, rate of about 4.5 to 5 per cent. However, Brazil and other countries in the region are addressing these problems from a position of strength.
Market volatility is likely to continue, although we would view weakness as a buying opportunity as the long-term outlook for Latin American markets remains attractive."
Lionel Bernard, Fondsmanager des "Amundi Funds Latin America Equities C C" (16.06.2010): "The potential of this region is continuously growing. As described before Latin America can base its economic growth on a improving domestic demand, while its dependence on the global commodities markets – being one of the largest producers for different soft and hard commodities – is gradually decreasing. Furthermore the sound financial situation of nearly all countries in the region leads us to be optimistic for the next future. Governments have clearly understood that they can not rely only on the proceeds from high commodity prices but they started in the recent years very successful to develop their countries spending money in different projects related e.g. to housing or infrastructure. We therefore see a good upside potential in Latin America, while the risks are rather limited.
Clearly a decoupling of this region from the rest of the world has not taken place and will from our point of view not take place. Therefore global economic risks and the risk appetite of foreign investors will continue to affect the markets in the region."
Dr. Mark Mobius, Fondsmanager des "Templeton Latin America A (Ydis) USD" (14.06.2010): "Wir glauben, dass die globale Rohstoffnachfrage das Angebot langfristig übersteigen könnte, was einen Aufwärtstrend der Rohstoffpreise auslösen wird. Ressourcenreiche Länder in Lateinamerika sind unseres Erachtens besonders gut aufgestellt, um von steigender globaler Nachfrage nach Rohstoffen zu profitieren. Chile und Peru gehören zu den weltweit führenden Kupferproduzenten, Mexiko ist per Saldo Ölexportland, Brasilien maßgeblicher Exporteur von Eisenerz und weichen Rohstoffen wie Sojabohnen und Kaffee und Kolumbien exportiert Rohstoffe wie Öl, Kaffee und Kohle. Spekulation auf Derivatemärkten dürfte jedoch zu verstärkten Preisschwankungen führen und wir gehen davon aus, dass der Aufwärtstrend bei den Rohstoffpreisen kaum gleichmäßig verlaufen wird. In diesem Bereich achten wir auf Unternehmen mit Stärke in der Produktion von Rohstoffen wie Öl, Eisenerz, Nickel oder Platin."
Chris Palmer, Fondsmanager des "Gartmore SICAV Latin American EUR A" (16.06.2010): "We expect Latin American markets to enjoy a high rate of economic growth in 2010. However, the combination of the Chinese Yuan peg to the strong US dollar and recent action by the Chinese authorities to reduce property prices is producing a tighter monetary environment. This could negatively impact Chinese demand for commodities in the future and is a risk which we will monitor closely. In addition, recent uncertainty over the European debt crisis, currently focused on Hungary, continues to weigh heavily on global markets. This has caused significant foreign exchange volatility which is unlikely to abate in the short term. All Latin American currencies have suffered falls over the past month.
Mexico should perform well over 2010 with a recovery in exports and construction. Signs of stabilisation in the US banking system suggest that markets have reached a critical turning point. As Mexico’s primary trading partner, any increase in US export demand and consumer spending is expected to drive Mexico’s own recovery forward. Consumer staples companies such as Wal-Mart de Mexico and Consumer Discretionary companies such as Grupo Famsa should be direct beneficiaries of this renewed pick-up in demand. Pursuant to US demand, we should expect Mexico’s unemployment numbers to begin falling and whilst the country’s inflation rate appears to have peaked, we expect interest rates to stabilise at current levels.
Brazil should see a robust recovery aided by low levels of inflation and low interest rates. Additionally, strong Chinese demand for Brazil’s iron ore has helped export volumes and doubled the price of iron ore in the last twelve months. The global demand for Brazilian goods has been steadily increasing and foreign direct investment by China and India bodes well for further trade flows. Further evidence of a rebounding economy is witnessed in the increase in automobile sales and new registrations.
The Fund remains underweight in Chile due to high valuations in banking and consumer shares. However, we expect Chile to get a boost from ‘earthquake recovery’ spending. Latin American market debt spreads remain heavily influenced by the developed market / high yield crisis but we believe Chile (as well as Brazil, Mexico and Peru) remains at a substantial discount to the more risky Venezuela."
Alex Duffy & Angel Ortiz, Co-Manager des "Fidelity Funds - Latin America A USD" (16.06.2010): "Favourable demographics have been the driving force behind increased demand in recent years; a secular driver which is set to continue in the long term. In the next two decades, approximately 200 million Latin Americans will enter the prime consumption sweet spot, aged 25 to 59 years. These individuals will purchase their first homes, buy their first refrigerators and insure their first cars. Brazil has witnessed falling unemployment, increasing real wages and a significant growth in the prosperity level of the population which is set to continue further as the percentage of the working-age population moves towards its predicted peak in the next 15 to 20 years.
Alongside benign demographics, the region is experiencing evolutionary changes in credit markets in terms of both consumer access but also an improvement in the terms of borrowing. As recently as 2003, the average annual interest rate for a vehicle loan was typically 55% and duration of the loan was typically 18-24 months; incredibly harsh terms in comparison to western developed norms. This has made consumer credit almost impossible to attain, leaving most Latin American countries to operate as cash economies. Recent changes have seen policy rates almost halved in Brazil and Mexico making credit increasingly affordable. Furthermore, GDP per capita and the average age of inhabitants in these countries are reaching levels where domestic consumption growth begins to rise rapidly. In considering statistics such as the level of mortgages to GDP in Brazil - just 2.5% (compared to 74% in the US) or the number of personal computers per 1000 people in Mexico is just 182, it is clear that the potential for consumption growth in the region over the next few years is huge."
Alexandra Vanhuyse, Fondsmanagerin des "KBC Equity Latin America Acc" (14.06.2010): "Outlook 2010:
Looking forward, we believe Latin America still represents an appealing medium term investment opportunity despite the significant rally of the past year. Looking at the macro economic picture for the region, we expect Central Banks to start tightening its monetary policy across the board, albeit that the pace of official interest rate hikes should be gradual, given that inflationary expectations remain modest in most countries of the region. GDP growth is to recover from roughly -3% percent in 2009, accelerating to an aggregate forecast of about +3.5 to +3.8% in 2010, one of the highest estimates worldwide. As the economy regains traction, corporate earnings should also pick up, posting according to some estimates in the market on aggregate 25% growth, which should imply that, all else equal, valuation multiples for the Latin American market will contract. Lastly, politics should be on the forefront this year, as mentioned earlier, with elections coming up in Brazil, Chile, Colombia and Peru.
Longer term, the outlook for Latin America is pretty promising, given that the region has been exposed to very few structural imbalances as we have seen in other countries throughout 2008 & 2009, while the financial market should remain underpinned by a deepening of the stock market, both in terms of liquidity and in terms of stock offerings, and by additional foreign fund inflows. The ever wider emergence of the domestic consumer in the mid term should also be a secular driver of Latin American growth. Investors should be aware of the high risk and volatility associated with investing in emerging markets such as Latin America.
- LatAm risks as already mentioned in the answers above: stock market volatility, increased risk aversion, foreign investor outflows
- Brazil main risks:
o Risk of an overheating economy (some forecast that GDP will growth by over 7.5% for FY2010, the fastest pace since the 1970s)
o Stock overhang / issuance of new & secondary offerings
o Presidential elections: not outcome in se but government spending out of control – increase in government debt
- Mexico main risks:
o New correction of the US economy (double dip – big risk for Mexico given significant linkage between the 2 economies)
o Public security situation deteriorating further, especially in the northern provinces."
Eric Anderson, Portfoliomanager des "ING (L) Invest Latin America" (16.06.2010): "Going forward we believe that investment and capital flows will favor emerging markets such as Latin America due to superior growth rates and more favorable demographics. These capital flows will reinforce strong economic growth and lead to a solid long term trend of lower real interest rates and stronger currencies. Meanwhile, the unsustainable fiscal balances and debt positions in the US, UK, EU and Japan only help to accentuate the relative attractiveness of emerging markets, including Latin America relative to developed markets. Therefore, we are strong believers in the long term outperformance of emerging markets relative to developed markets. The key risks that we see are related to European contagion. While the real economic linkages between Latin America and Europe are quite low, Latin America has received a significant amount of foreign direct investment over the last 20 years particularly from Spain, Portugal and Italy. If these flows stop, it could impact the long term growth potential of the region. Another risk is that of a hard landing for the Chinese economy. While not our base case scenario, significantly slower growth in China which negatively impacts housing starts and fixed investment would weaken commodity prices and have a knock on effect on many commodity oriented stocks in Latin America. Finally, Mexico’s ongoing battle against drug cartels and organized crime could impact long term direct investment in that country, particularly in the north of the country where violence is greatest."
Jan Nellemann, Fondsmanager des "Jyske Invest Latin American Equities" (16.06.2010): "Starting with the risks. If the overall market risk perception continues to fluctuate with the great swings we have seen in the last two years, that of cause will influence the performance of the Latin American equity markets, both up and down. The Latin American region is still influenced by a certain political risk factor. In Brazil there is an upcoming presidential election in the beginning of October this year and as we have seen Brazil growing in to a more sound economy in the last couple of years, there could be some insecurity in the market as to whether a new president will be able to uphold this economic direction. As the region has a great export of both soft and hard commodities to the fast growing economies in the Far East, the region will be negatively effected if the Far East regions – especially Chinas - growth goes down.
The market potential is to some extent dependant on the global economic growth, but when that is said, one should bear in mind that as the countries are growing and people are experiencing higher wealth. The countries are getting more and more self driven economic growth vice. Due to the relative poverty in the region savings and investments has been at relatively low levels, especially in Brazil. By encouraging to increasing investments the potential growth rate can be lifted even further, which should have a positive effect on the stockmarkets."
Alle Performancedaten per 07.06.2010 in Euro: