Fund Profile

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This is a non-independent marketing communication commissioned by BlackRock. 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.

Overview
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Overview

BlackRock Latin America (BRLA) offers exposure to the dynamic Latin American equity markets. Managers Ed Kuczma and Sam Vecht aim to maximise total returns, but the trust pays a dividend of 1.25% of NAV each quarter (5% on an annualised basis) from capital where necessary. This means BRLA offers a high yield without being constrained to buy high-yielding companies, which might have worse growth prospects.

Ed and Sam use a combination of bottom-up research on companies and top-down macroeconomic analysis in building their portfolio. In recent months they have focussed on increasing the quality of the portfolio, believing companies in strong competitive positions are likely to outperform in the recovery. With a number of elections on the horizon, they have recently been reducing country risk to ensure they are not exposed to unexpected outcomes and stock selection is a greater driver of returns.

Latin America has outperformed in the reflationary rally since the emergence of vaccines against COVID-19 (see Performance section), driven by its high exposure to materials and energy. Ed and Sam believe fiscal stimulus in the US and globally as well as the continuation of economies reopening support the commodities companies in the near future. As we discuss in the Portfolio section, there are also secular trends behind some commodities such as the shift to electric vehicles, while the opportunities in the growth sectors of technology and e-commerce are growing in the region from a low base, and increasingly diversifying the portfolio.

BRLA trades on a discount of 12%, with the shares having sold off as the delta wave spread and the reopening trade slowed.

Analyst's View

BRLA is the only equity-only trust offering access to the Latin America region. The strong returns over the past year illustrate the sensitivity of the region to global economic growth, and the trend may continue as the recovery from the pandemic does. Additionally, the commodity producers which form an important part of the portfolio are likely to benefit from secular trends, chiefly the switch to EVs from petrol and diesel cars, and also from the infrastructure spending planned to boost the recovery – some of which have an environmentally friendly angle.

However, the region is also very volatile. As well as being exposed to any negative surprises for the recovery, political volatility has to be borne in mind too, hence the managers’ decision to reduce country risk relative to the benchmark in the near future. Nevertheless, with China’s strong run of outperformance at an end, and with the political and regulatory issues facing that country’s equity markets, we think investors are likely to be looking to diversify their emerging markets exposure, and we note that Latin America makes up less than 10% of the MSCI Emerging Markets Index, meaning most investors are unlikely to have much exposure.

In addition to the growth potential in the region, BRLA’s dividend policy means that it pays a high yield on an initial investment. Assuming the markets grow over the long run, the dividends will grow too, although with some variability.

bull bear
Should display high sensitivity to a global economic recovery
The fallout from the coronavirus pandemic is unpredictable in the short term
Offers a 5% annualised yield on NAV
Latin American markets and politics can be extremely volatile
An experienced management team with deep resources to draw on
Any increase of gearing brings greater exposure to falling markets as well as rising markets
Continue to Portfolio
2022 Kepler Income & Growth Rated Fund

This trust has been awarded a rating by Kepler Trust Intelligence for income & growth... Find out more

Fund History

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…
29 Apr 2022 O Canada
The North American market may act as a safe haven for investors in the near future…
27 Apr 2022 Finding value in a haystack
Non-income value strategies are becoming increasingly scarce, but the holdouts represent attractive near-term opportunities…
14 Apr 2022 Has the commodities ship sailed?
The commodities boom may be longer-lasting than you think…
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...
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...
22 Mar 2018 Fools rush in
The strong performance of emerging markets has seen investors flooding into ETFs, but the evidence shows that active managers produce far better results...
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