Fund Profile

BlackRock Latin American 10 December 2019


Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by BlackRock Latin American. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

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BlackRock Latin America (BRLA) aims to profit from the growth potential in Latin American equities, chiefly those of Brazil and Mexico. The trust is managed by Ed Kuczma and Sam Vecht, who lean on the deep resources of the broader BlackRock emerging markets team. Currently BRLA is heavily weighted towards Brazil. The managers are highly bullish on the country thanks to its favourable political scene, the potential for further interest rate cuts and booming personal consumption.

Although Ed and Sam aim to maximise capital growth, the trust pays out 1.25% of NAV each quarter as a dividend, which would be 5% on a constant NAV basis. The dividend is paid from capital if income is not sufficient.

The trust’s process has been revamped under the new managers, who took over in January 2019. While the key elements of the strategy remain the same, there has been greater integration with the wider EM team, aided by Sam’s presence. Sam heads the EMEA, Frontiers and Latin America desk and runs portfolios with a broader focus, while Ed is a Latin America specialist. The managers report that they have integrated macro and political analysis deeper into the portfolio construction process, while they have also made the portfolio more concentrated and active, increasing its potential for outperformance.

BRLA is overweight Brazil and Mexico, and gearing is also high relative to its possible range, indicating the managers’ optimism for their markets and expectations of good returns to come. Their more active stance has not yet been rewarded with returns, however, as we discuss in the performance section.

BRLA currently trades on a 12.7% discount at the current share price, close to its five-year average of 13%. The discount narrowed in the first half of the year, following the announcement that Ed and Sam were taking over as managers, but has widened back out to near where it started 2019.

Kepler View

For investors in BRLA, taking a view on Brazil is crucial given it makes up two thirds of the trust’s benchmark index, and is currently an overweight in the portfolio. In our opinion, this is an exciting time to invest in the country, with a reformist president making changes many thought impossible. Bolsonaro has even managed to raise the Brazilian pension age, reducing the biggest drain on the state’s resources (many Brazilians have hitherto been entitled to retire in their 50s on a state pension). For investors, however, the government’s new policy of not interfering with how private companies are run, and the potential for further rate cuts, are probably the biggest reasons to be bullish. The currency being at historic lows should also provide some support.

In terms of the trust itself, the new managers’ more active policy should increase the potential for alpha generation. The integration of BlackRock’s sophisticated macroeconomic resources and analysis should also bring benefits. BRLA offers an attractive way to invest in a market of which investors in broad emerging markets funds are unlikely to own much – Brazil now makes up less than 8% of the MSCI Emerging Markets Index. As well as the potential for capital growth, the new 1.25% quarterly dividend policy should also be attractive for those seeking to diversify their sources of income.

bull bear
Exciting prospects for Brazil, the trust’s largest position Politics can be volatile in the region
A 1.25% quarterly dividend
The region can be dependent on external economic forces on trade, currencies, etc.
A more concentrated and high conviction portfolio has greater alpha-generation potential
A more concentrated and active portfolio can underperform more as well as outperform more

Continue to Portfolio

Fund History

28 Jun 2024 BlackRock Latin American Investment trust: A Look Ahead for 2024
Latin American economies welcomed 2024 with new economic vigour. They have shaken off a legacy of economic mismanagement, and now look set to play a new role in the global economy. The region’s economies are broadening out from their traditional commodity base, bringing a dynamism to the region and a breadth of choice for investors...
27 Mar 2024 Results analysis: BlackRock Latin American
BRLA outperformed its benchmark and even the S&P 500 in 2023…
03 Nov 2023 BlackRock Latin American
Chris Brinkmann
Rewatch this webinar which was part of our October and November online event 'The Best of BlackRock'...
Watch Recording
11 Oct 2023 Fund Analysis
Managers’ ambition to take more active positions has so far paid off…
20 Sep 2023 Five questions about emerging markets
We track key developments in the diverse emerging markets universe…
21 Apr 2023 Latin America: first out of the blocks?
Latin America has been resilient over the past 12 months, and could be early to recover when the inflation environment shifts, says Christoph Brinkmann, portfolio manager on the BlackRock Latin American Investment trust...
06 Apr 2023 Results analysis: BlackRock Latin American
BRLA’s managers argue Latin America is in a strong position for 2023…
08 Mar 2023 The next supercycle
Our research suggests a structrual tailwind could support the prospects for commodities throughout the next decade...
25 Jan 2023 The toad to recovery
Two of our analysts debate the outlook for China in 2023…
18 Jan 2023 Fund Analysis
Latin America looks set to recover first, according to the managers of BRLA…
11 May 2022 Fund Analysis
The Latin American region seems to be in a sweet spot, benefitting from high commodity prices…
04 May 2022 Time to change the record
We ask whether equities can still offer meaningful diversification or whether investors need to turn to alternatives…
27 Apr 2022 Finding value in a haystack
Non-income value strategies are becoming increasingly scarce, but the holdouts represent attractive near-term opportunities…
11 Apr 2022 Results analysis: BlackRock Latin American
BRLA was the top-performing investment trust in Q1 2022…
25 Mar 2022 Slides and Audio: BlackRock Latin American
Download the presentation and listen to the audio from our 'Ideas for your ISA' virtual Spring event on 15 March...
23 Mar 2022 Fifteen ideas for your ISA
Slides and audio from our event last week, featuring fund managers running money in every major market in the world...
17 Mar 2022 It's the end of the world as we know it
We examine five potential themes for investors seeking long-term returns in a troubled and uncertain world...
23 Feb 2022 Regime change
Ahead of our spring conference, we ask whether investors need to junk their portfolios and start again…
13 Oct 2021 Beyond the Middle Kingdom
As momentum falters in the emerging markets powerhouse, we examine the options for investors outside China...
29 Sep 2021 Slings and arrows
Our analysts argue over whether it’s better to take arms against volatility in a portfolio, or to simply suffer it…
28 Sep 2021 Fund Analysis
BRLA offers an annualised yield of 5% from a region which should benefit from a global recovery…
01 Sep 2021 Winter is coming
Summer was a welcome opportunity for exhausted investors to turn their backs on the legion threats they face, but they haven't gone away and the days grow short - we examine four in detail...
30 Jun 2021 Inflation – a real threat or hot air?
Two of our analysts ask whether recent high inflation numbers indicate something long-lasting and troubling is happening…
05 May 2021 Vive la revolution
For thirty years quality has had a structural tailwind; but revolt is in the air and value is on the barricades…
28 Apr 2021 Latin America and the commodities supercycle
Commodity prices have been rising fast. Ed Kuczma, Co-Manager of the BlackRock Latin American Investment Trust plc, says Latin America should be a key beneficiary and he is positioning for a long-term trend.
06 Apr 2021 Results analysis: BlackRock Latin American
We look at how BRLA has performed, and what 2021 might have in store for the trust…
24 Mar 2021 Shoot to Thrill: ISA targets for long term growth
We all intend to invest for the long-term but can often be distracted by the news...
16 Mar 2021 Fund Analysis
The managers of BRLA are highly bullish on their region’s prospects in a global recovery from the pandemic…
11 Mar 2021 Slides and Audio: BlackRock Latin American
Download the presentation and listen to the audio from our 'Ideas for your ISA' Spring Conference on 02 March...
10 Mar 2021 Spring Conference '21
Audio and presentations from 21 of the UK’s leading investment trust managers…
10 Dec 2020 Fund Analysis
BRLA invests in Latin America, which has historically seen strong returns in global recovery periods…
09 Dec 2020 A bumper harvest?
Agricultural and industrial commodities have rallied strongly, but what are the implications for emerging market allocations...?
13 Aug 2020 Underground bangers
We look for hidden gems in the smaller end of the investment trust universe...
12 May 2020 Fund Analysis
BRLA invests in Latin America, where valuations could indicate a generational buying opportunity…
06 May 2020 Latin America: discovering new growth
Latin American markets have been hit hard by the coronavirus outbreak. However, says Ed Kuczma, Co-Manager of the BlackRock Latin American Investment Trust plc, there may be opportunities amid the gloom...
01 Apr 2020 Back in Brazil
As global markets have suffered in 2020, Brazilian stocks have been no exception. Could this be a good time to consider buying?
16 Jan 2020 Drifting apart: how emerging markets have become less correlated
We examine how correlations between different emerging markets have evolved, and whether single country strategies could diversify returns going forward....
10 Dec 2019 Fund Analysis
BRLA has raised its gearing in anticipation of a Brazilian market rally...
07 Oct 2019 Is a Brazilian breakthrough on the horizon?
Brazil's currency often upsets assumed norms, and current signs offer the possibility another twist is coming...
04 Sep 2019 Time to pay attention to Latin America?
07 May 2019 Fund Analysis
The trust's high profile new managers are bullish on the outlook, particularly for Brazil, and the discount has narrowed sharply...
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