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About this investment trust

The Company aims to secure long-term capital growth and an attractive total return primarily through investing in quoted securities in Latin America.

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

Why choose it?

Latin American countries hold a wealth of opportunities for long-term investors keen to participate in the region's growth and diversity. Our experienced team draws on its extensive network in the region to uncover the most compelling opportunities across a variety of countries and sectors.

Diversification and asset allocation may not fully protect you from market risk.

Suited to…

Investors with a long-term horizon who want to include Latin American shares in their portfolio and are able to tolerate periods of market volatility in pursuit of capital growth. This means shares prices may rise and fall more frequently.

What are the risks?

  • Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.
  • Overseas investment will be affected by movements in currency exchange rates.
  • Emerging market investments are usually associated with higher investment risk than developed market investments. Therefore the value of these investments may be unpredictable and subject to greater variation.
  • Investment strategies, such as borrowing, used by the Trust can result in even larger losses suffered when the value of the underlying investments fall.

Useful information

Fees & Charges

Annual Expenses as at Date: 31/12/2020

Ongoing Charge (including any Performance Fee): 1.1%

Management Fee Summary: The management fee is 0.80% per annum of the Company's NAV.

  • ISIN: GB0005058408

    Sedol: 0505840

    Bloomberg: BRLA LN

    Reuters: BRLA.L

    LSE code: BRLA

  • Name of Company: BlackRock Fund Managers Limited

    Telephone: 020 7743 3000

    Email: cosec@blackrock.com

    Website: www.blackrock.com/uk

    Correspondence Address: Investor Services
    BlackRock Investment Management (UK) Limited
    12 Throgmorton Avenue
    London
    EC2N 2DL

    Name of Registrar: Computershare PLC

    Registered Office: 12 Throgmorton Avenue
    London
    EC2N 2DL

    Registrar Telephone: +44 (0)370 707 1112

    Place of Registration: England

    Registered Number: 2479975

  • Year End: 31 December

    Results Announced: March (final)

    AGM: May

    Dividends Paid: February, May, August and November

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Fund manager commentary

31 May 2021

Please note that the commentary below includes historic information in respect of the performance of portfolio investments, index performance data and the Company’s NAV and share performance.

The figures shown relate to past performance. Past Performance is not a reliable indicator of current or future results.

For the month of May 2021, the Company’s NAV returned 3.9%1 with the share price remaining flat1. The Company’s benchmark, the MSCI EM Latin America Index, returned 5.2%1 on a net basis (all performance figures are in sterling terms with dividends reinvested).

Latin American (LatAm) equities posted positive performance over the month with Peru and Brazil leading the rise.

Allocation in Colombia contributed the most to relative performance over the period while allocation in Chile detracted most from relative returns. The off-benchmark holding in the Brazilian logistics company, Santos Brasil, was the top contributor on a relative basis as the stock outperformed driven by strength in container handling volumes and the announcement of a long-awaited contract renegotiation with their largest client that allowed for noticeable pricing gains. An overweight position in the Brazilian bank, Banco Bradesco, also benefitted the portfolio as the stock has been a beneficiary of an upward revision to Brazilian GDP (Gross Domestic Product) estimates, which should lead to improving loan growth and positive portfolio mix toward a more profitable lending profile. On the other hand, an overweight position in Sociedad Quimica y Minera, a Chilean chemical company, detracted most from relative performance as the Lithium sector in Chile is coming under scrutiny as a target for higher taxation in the country to pay for additional social programs. An overweight position in Suzano, a Brazilian pulp and paper company, also weighed on relative returns as leading indicators continue to show reduced support for pulp price momentum after the company had seen the strongest rally in history.

Over the month we added to Credicorp, a Peruvian financial services company, on the view that political uncertainty is creating opportunity for long-term alpha generation. The country was in the midst of a tightly contested Presidential election which created a great deal of uncertainty and caused a sharp depreciation in the currency, despite favorable external conditions from high metal prices. We believe fears of radical changes to the favorable institutional framework of the company are overdone and are looking to add exposure on the back of the volatility created by political uncertainty. We initiated a position in Neoenergia, a Brazilian electric services company, based on attractive long-term growth prospects for the firm combined with the stock price presenting attractive discounts to historical averages for the stock. We reduced our exposure to Brazilian pulp and paper company, Suzano, given the low conviction that pulp prices will remain as buoyant in the second half of 2021 given that leading indicators continue to show reduced support for pulp price momentum after the strongest rally in history. We sold our holding of Pagseguro Digital, a Brazilian e-commerce company, as intensifying competition going forward is expected and the high valuation is not supportive for the investment case given earnings headwinds. The portfolio ended the period being overweight to Chile and Mexico, whilst being underweight to Colombia and Peru. At the sector level, we are overweight industrials and consumer discretionary, and underweight consumer staples and utilities.

While the recovery gains traction, a more nuanced picture emerges among LatAm countries. Dealing with a prolonged shock is proving to be a challenge, and while the cyclical rebound somehow levels the short-term narratives, prospects beyond 2021 reveal a more nuanced picture. Our country positioning favors countries with better fundamentals, which display a healthier sovereign credit profile and are better placed to benefit from the strong rebound in the US and China. We see Chile and Mexico meeting these criteria, while more indebted and less open economies, such as Argentina, Brazil, and Colombia may struggle to sustain above-trend growth. The COVID-19 crisis led to a jump in public sector debt. Economies with a weak starting point on debt metrics saw debt-to-GDP ratios soar, with Brazil and Argentina reaching a threshold where debt dynamics turn into a real concern, in our view. These countries now have limited room for any additional fiscal policy support and we could argue the same about Colombia, despite lower debt levels. In Chile and Mexico, debt is at less worrisome levels and the current fiscal outlook points to manageable debt-to-GDP over the coming years.

The external environment remains supportive for LatAm. The continuation of the global V-shaped recovery should be led by a robust capex cycle going forward, meaning continued support for currently high commodity prices. This is key to the growth performance for the region but especially beneficial for Mexico and is likely to help Chile to sustain above-average expansion. Commodity champions, such as Argentina, Brazil and Colombia will also benefit from this external push, but the traction generated for these less open and domestic-driven economies is a fraction of the positive impact expected for more open economies. In spite of the current rebound, important idiosyncratic risks remain. These risks mainly relate to the growing strength of unorthodox policy ideas in a region historically marked by significant inequality. The political calendar concentrates a number of key electoral events from now to the end of 2022, and it is reasonable to expect a growing debate around proposals which would increase state intervention and government spending. Whether these proposals, and the candidacies backing them, will get rewarded by voters is hard to say, but in the aftermath of the COVID-19 shock, this may prove the key question for LatAm going forward.

Source: Unless otherwise stated all data is sourced from BlackRock as at 31 May 2021.

Source: 1Datastream as at 31 May 2021.

Any opinions or forecasts represent an assessment of the market environment at a specific time and are not intended to be a forecast of future events or a guarantee of future results.

This information should not be relied upon by the reader as research, investment advice or a recommendation.

Risk: Reference to the names of each company mentioned in this communication is merely for explaining the investment strategy, and should not be construed as investment advice or investment recommendation of those companies.

Portfolio manager biographies

Edward Kuczma, is co-manager of the BlackRock Latin American Investment Trust plc. Ed is a Portfolio Manager for BlackRock's Latin American Equity funds and a member of the Global Emerging Markets Equity team within BlackRock's Fundamental Active Equity business. He is a seasoned veteran of the emerging markets asset class with over 15 years of investment experience across all sectors and countries in Latin America. Ed has a BSc degree as a double major in Finance and Business Administration from Georgetown University and is a CFA charterholder.

Sam Vecht is co-manager of the BlackRock Latin American Investment Trust plc. He is Head of the Emerging Europe, Frontiers and LatAm team within the Fundamental Active Equity division of BlackRock's Active Equities Group and is responsible for managing long-only and long/short portfolios in both Emerging and Frontier markets. He is also co-manager of the BlackRock Frontiers Investment Trust plc and BlackRock Latin American Investment Trust plc. Sam joined BlackRock in 2000 in the Global Emerging Markets Team. He has a degree in international relations and history.

Edward Kuczma profile photo
Edward Kuczma
Portfolio Manager
Sam Vecht profile photo
Sam Vecht
Portfolio Manager

Board of directors

Carolan Dobson (Chairman) was appointed as a Director on 1 January 2016 and as Chairman on 2 March 2017. She is the former Head of UK Equities at Abbey Asset Managers and former Head of Investment Trusts at Murray Johnstone and therefore brings a wealth of industry experience to the Board. She is currently Non-Executive Chairman of Brunner Investment Trust plc and Baillie Gifford UK Growth Fund plc.

Craig Cleland was appointed as a Director on 1 January 2019 and Chairman of the Audit Committee from 31 March 2019. He is Head of Corporate Development/Investment Trusts at CQS (UK) LLP, a multi-asset asset management firm in London with a focus on credit markets, where his responsibilities include advising and developing the closed-end fund business. He is also a Director of Invesco Perpetual Select Trust plc and Martin Currie Asia Unconstrained Trust plc. He was previously at JPMorgan Asset Management (UK) Limited, latterly as Managing Director, and led their technical groups in the investment trust business. Prior to that, he was a Director and Senior Company Secretary at Fleming Investment Trust Management, transferring to JPMorgan Asset Management after Chase Manhattan Bank acquired Robert Fleming Holdings Limited.

Mahrukh Doctor was appointed as a Director on 17 November 2009. Dr Doctor is a senior lecturer in political economy at the University of Hull, specialising in Latin America. Previously she was Adjunct Associate Professor at the John Hopkins University SAIS Europe in Bologna and Research Fellow at St. Anthony's College and the Centre for Brazilian Studies at the University of Oxford and an Economist at the World Bank. She has been the Brazil expert on the Oxford Analytica International Conference Latin America panel since 2002.

Laurie Meister was appointed as a Director on 1 February 2020. Ms Meister has 32 years of financial markets experience, both in New York and in London, with 28 years dedicated to having led and developed Latin American equity and capital markets businesses and other emerging markets. Her most recent position was as the Director of Latin American equity sales for European institutional clients for Deutsche Bank from 2008 to 2018. Prior to this she worked for J.P. Morgan Chase as a Director with responsibility for rebuilding the Cemea (Central and Eastern Europe, Middle East and Africa) equity business and then became the Senior European Equity Director for their Latin American equity business. Her initial experiences in the Latin American equity arena included the European start up in the early 1990s of the Merrill Lynch Latin American research sales operation. She then moved as a Managing Director to Robert Flemings in 1995 where she co-led the start-up of their Latin American trading sales and research operations across the region. Ms Meister has a B.A. from the University of Pennsylvania and an M.B.A. in Finance from the New York University Stern School.

Nigel Webber was appointed as a Director on 1 April 2017. Mr Webber’s broad investment experience has seen him lead the design of investment solutions for affluent and high-net-worth individuals across global markets and multiple asset classes. Most recently, he was Global Chief Investment Officer for HSBC Private Banking where he held global responsibility for all investment activity for Group Private Banking. During his time at HSBC, Mr Webber was also Chairman of the Global Investment Committee for Group Private Bank and Chairman for HSBC Alternative Investments Limited. Prior to this, he held a number of blue-chip executive positions around the world for investment and asset management businesses. He is also a qualified accountant.

Investment strategies targeting growth and income
Investment strategies targeting growth and income
Over 25 years of proven experience running investment trusts
Over 27 years of proven experience running investment trusts. (December 2019)
Unparalleled research capabilities
Unparalleled research capabilities and experienced stock pickers
Contact
To get in touch contact us on:
Telephone: 020 7743 3000
Email: cosec@blackrock.com

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