Liontrust Latin America Fund

Q4 2020 review

The Liontrust Latin America Fund returned 29.8% during the fourth quarter of 2020, compared with a return of 27.5% for the MSCI EM Latin America Index*.

Global markets rallied in the fourth quarter as vaccine announcements led to hopes that mass vaccination will allow for a return to normalcy, despite coronavirus cases rising across the world. Latin America has been among the regions hardest hit by the pandemic and therefore should benefit most from the vaccine rollout and global recovery. Most countries in the region have procured enough doses to vaccinate their whole population and Mexico, Chile and Argentina had begun administering vaccines by year-end. Brazil, Peru and Colombia are expected to follow soon. Brazil has the advantage that most of its vaccines will be produced locally.

The US election was also supportive for global markets with Joe Biden winning the presidency and the Democrats subsequently taking control of both houses. With the very close links between the two economies, the US accounts for 80% of Mexican exports, Mexico will be the primary beneficiary of the US economic recovery and the prospect of further stimulus. Of particular importance given AMLO’s austere policies, Mexico will get stimulus it doesn’t have to pay for.

The MSCI Latin America Index returned 27.6% during the fourth quarter. The Liontrust Latin America Fund bettered its comparator benchmark returning 29.8%. Strong returns were seen in all markets with Colombia leading the way, rising by 40% supported by oil’s 26% rally. Portfolio returns were helped by the performance of consumer discretionary and utilities in Brazil, and financials in Mexico and Chile.

The expectation is that 2021 will be a year of rapid recovery and that life will have more or less returned to normal by the end of the year. Although the prevailing view is that 2021 will bring us back to normality, some developments seen in 2020 will persist. Distinguishing between cyclical and structural changes is important in understanding the outlook for 2021 and beyond.

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

 

 

Dec-20

Dec-19

Dec-18

Dec-17

Dec-16

Liontrust Latin America C Acc GBP

-18.1

23.2

3.8

18.6

51.5

MSCI EM Latin America

-16.5

12.9

-0.8

13.0

56.3

 

*Source: FE Analytics as at 31.12.20.

 

**Source: FE Analytics as at 31.12.20

 

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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.

 

Monday, January 25, 2021, 3:54 PM