Liontrust Latin America Fund

Q4 2019 review

The Liontrust Latin America Fund returned 8.5%* in the fourth quarter, significantly outperforming the MSCI EM Latin America Index’s 2.8% return.

Market Overview

Global markets enjoyed a positive end to 2019. Returns were underpinned by the US and China reaching a phase one trade deal, the US, Canada and Mexico agreeing on the USMCA trade agreement, accommodative monetary policy, better than expected earnings, and emerging green shoots from manufacturing PMI data.

Latin American markets returned 2.8% during the final quarter, however there was a notable divergence across countries. Argentina, Brazil and Colombia all posted healthy positive returns (+5-6%), while Mexico and Peru were modestly down (-2-3%), and Chile fell by 16% following widespread social unrest after a proposed hike in metro tariffs. Argentina bounced back from a very weak third quarter, Brazil continued to see strong reform momentum and economic acceleration, and Colombia benefited from an 8% rise in oil prices.

Key contributors to the outperformance in the fourth quarter were holdings in the materials, consumer and utilities sectors in Brazil, and the financials sector in Mexico. This took 2019 returns to 23.2% compared with 12.9% for the MSCI EM Latin America Index.

Moving into 2020, economic acceleration and reform momentum will be key drivers in Brazil. Having now passed the pension reform, Congress will turn their attention to wide ranging reforms including a reduction in the role of the state, privatisations, and a comprehensive tax reform. In Mexico, AMLO appears to be edging back towards the centre, much like he did while Mayor of Mexico City, which could spur a rally from the currently depressed levels.

Outlook

Looking across emerging markets, investors are crying out for reformist governments. In Asia, we have seen this with India, and in Latin America, Peru, Chile, Colombia and now Brazil have elected strong pro-market governments. The populist tide has finally reversed as governments focus on structural reforms to raise productivity and economic growth. 

Discrete years' performance** (%), to previous quarter-end:

 

 

Dec-19

Dec-18

Dec-17

Dec-16

Dec-15

Liontrust Latin America C Acc GBP

23.2

3.8

18.6

51.5

-20.9

MSCI EM Latin America

12.9

-0.8

13.0

56.3

-27.0

IA Specialist

13.1

-5.1

9.7

26.2

-5.7

 

*Source: Financial Express, as at 31.12.2019, total return (net of fees and income reinvested)

 

**Source: Financial Express, as at 31.12.2019, total return (net of fees and income reinvested)


For a comprehensive list of common financial words and terms, see our glossary 
here.

  

Key Risks

Past performance is not a guide to future performance. Do remember that the value of an investment and the income generated from them can fall as well as rise and is not guaranteed, therefore, you may not get back the amount originally invested and potentially risk total loss of capital. Investment in funds managed by the Global Equity (GE) team may involve investment in smaller companies - these stocks may be less liquid and the price swings greater than those in, for example, larger companies. Investment in funds managed by the GE team may involve foreign currencies and may be subject to fluctuations in value due to movements in exchange rates. The team may invest in emerging markets/soft currencies or in financial derivative instruments, both of which may have the effect of increasing volatility. Some of the funds managed by the GE team hold a concentrated portfolio of stocks, meaning that if the price of one of these stocks should move significantly, this may have a notable effect on the value of that portfolio.

Disclaimer

The information and opinions provided should not be construed as advice for investment in any product or security mentioned, an offer to buy or sell units/shares of Funds mentioned, or a solicitation to purchase securities in any company or investment product. Always research your own investments and (if you are not a professional or a financial adviser) consult suitability with a regulated financial adviser before investing.

Friday, January 24, 2020, 10:24 AM