Investment Universe, Process, Strategy and Benchmark – How does the Fund Manager invest? (ISIN: LU0201575346)Patrice Lemonnier:"The investment universe of Amundi Funds Equity Latin America consists of the benchmark universe, i.e. MSCI EM Latin America, plus approximately 100 off-benchmark companies followed on an opportunistic basis. Any company whose sales are over two-third in Latin America is eligible whatever its place of listing. The investment process is based on a proactive management approach focused mainly on fundamental analysis and implemented by an investment team with access to a rich network of information sources so as to make informed decisions. The three main sources of performance are geographic allocation (country selection), sector allocation within each country and stock picking. Those three sources are combined in a tried-and-tested management process combining top-down and bottom-up approaches in order to take into account the specific characteristics of investment and management risks inherent to emerging markets.
The MSCI EM Latin America which is diversified, widely used and offers a good and compatible coverage of the Latin America equity coverage is an appropriate benchmark."
Performance Review 2005
Patrice Lemonnier:"In 2005 the 5.7% of outperformance (55.35% vs 49.65%) stemmed from the following positions: our overweight on Brazil and our underweight on Chile have been the main contributors in terms of country allocation. In terms of sector allocation our overweight of the consumer sector in Brazil and of the financial sectors in Brazil and Mexico contributed significantly to the performance. In terms of stock picking, participation in cheap Brazilian IPOs also contributed to outperformance."
Performance Review 2006
Patrice Lemonnier:"In 2006, the fund achieved an outperformance of 6.44% (50.01% vs 43.57%). Contribution from country allocation was still positive but lower than in 2005. Added value came mostly from underweighting Chile and Columbia. Positive contribution from sector and stock picking was significant especially in Brazil (overweight financials and industrials) and in Mexico (overweight on consumer staples and financials)."
Performance Review 2007
Patrice Lemonnier:"In 2007, the fund outperformed its benchmark by 3.38% (53.78% vs 50.40%). Country allocation was positive as a result of Brazil´s strong overweight and relative strength, although sector and stock contributions were penalised by the structural underweight of Petrobras (which may not represent more than 10% of the pooled funds, for regulatory reasons while weighting 19% of the benchmark). Stock picking in Brazilian Telecommunications and Financials as well as in Mexico (mid caps in retail and housing sector) contributed materially."
Performance Review 2008
Patrice Lemonnier:"In 2008, the fund underperformed its benchmark by 38 basis points (-51.79% vs -51.41%). Country allocation, including foreign exchange, had a negative contribution mainly due to our overweight of Brazil which underperformed more defensive countries such as Chile and Colombia (both underweight positions in the fund) in the second half of the year. Sector selection had a significant positive contribution, mainly due to the overweight position on telecoms and utilities as well as in financials in Brazil and to our structural underweight in energy. Stock picking had a negative contribution and erased gains made by sector selection, mainly due to Brazilian financial and material stocks and consumer staples in Mexico."
Performance Review 2009
Patrice Lemonnier:"In 2009, The fund outperformed MSCI Latin America by 22.68% (126.45% vs 103.77%). Country allocation, including foreign exchange, had a significant positive contribution mainly due to our overweight on Brazil which strongly outperformed and to our neutral (+) position on Mexico. Sector selection had a negative contribution, mainly due to the overweight position on telecoms and utilities in Brazil. Stock picking had a tremendous positive mainly due to good picks in Materials and Consumer Discretionary in Mexico as well as good choices in Industrials, Financials, Consumer Discretionary and Utilities in Brazil."
Performance Review 2010
Patrice Lemonnier:"The fund outperformed its index by 190bps in 2010. This was mainly due to strong gains in stock picking. Sector allocation also generated a positive impact mainly driven by the energy underweight in Brazil. However, country allocation had a negative impact essentially due to the large underweight on Chile and Colombia and the overweight on Brazil.
Over the year, the exposure to Mexico was reduced to neutral mainly through consumer stocks sales although materials (copper) were increased. Chile and Colombia underweight were raised on outperformance during the summer. Brazil overweight was slightly increased by buying energy, homebuilders and materials while reducing more defensive consumer staples, telecom and utilities."
Performance Review 2011
Patrice Lemonnier:"The fund underperformed its index by almost 470bps in 2011. Country allocation negative impact was essentially due to our underweight on Colombia and the overweight on Brazil. Sector allocation generated a negative impact, mainly driven by the consumer discretionary overweight in Brazil and the underweight positions in Brazil on consumer staples and IT. Stock picking also contributed negatively, without any significant individual impact.
Over the year, we raised our Brazil overweight by buying energy, telecom and utilities while reducing homebuilders and materials. In Peru, after the presidential election, we changed the stance from underweight to overweight mainly through banking. On the contrary, we changed Mexico from slight overweight to underweight by selling materials and consumer discretionary."
Performance 2012 - Year-to-Date
Patrice Lemonnier:"The fund outperformed its index by 7bps in January. This was mainly generated from country (Brazil overweight and Chile underweight) and sector (discretionary consumption overweight) allocations. Over the month, we raised materials to overweight through steel and Pulp & Paper in Brazil on underperformance, valuation and improving prospects. We also raised our Consumer Discretionary overweight through Brazilian homebuilders. We reduced Telecom in Mexico and Brazil."
Performance since 2007
Patrice Lemonnier:"The fund outperformed its index by 160bps since 2007. Brazil overweight vs. Chile and Colombia underweight were main elements to country contribution. Sector allocation had all together relatively little impact over the period. Stock picking was a positive contributor mainly thanks to tremendous good picks in 2009.
Over the period, the fund was positioned to benefit from structurally improving economic conditions and relative attractive valuations of Latin America vs. developed markets as well as trade-off between its commodity rich status and increasing trade relations with China with important internal demand drivers."