BlackRock Latin American Investment Trust plc

About this investment trust

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.

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

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.

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

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.

Fees & Charges

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ESG Integration

The fund noted above does not commit to sustainable criteria nor does it have a sustainable investment objective.

BlackRock considers many investment risks in our processes. In order to seek the best risk-adjusted returns for our clients, we manage material risks and opportunities that could impact portfolios, including financially material Environmental, Social and/or Governance (ESG) data or information, where available. See our Firm Wide ESG Integration Statement for more information on this approach and fund documentation for how these material risks are considered within this product, where applicable.

Fund manager commentary

28 February 2025

Comments from the Portfolio Managers

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.

The Company’s NAV fell by -4.6% in February, underperforming the benchmark, MSCI Emerging Markets Latin America Index, which returned -3.1% on a net basis over the same period. All performance figures are in sterling terms with dividends reinvested.¹

While Emerging Markets (+0.5%) outperformed Developed Markets ( -0.7%) in February, Latin America lagged. Latin America's underperformance was driven by weakness in Brazil (-4.8%). Most other markets ended the month in positive territory but their relative size in the region was not enough to offset declines in Brazil; Colombia (+7.7%), Chile (+4.0%), Mexico (+3.2%).

At the portfolio level, an underweight position to Chile and security selection in Mexico were the largest detractors to performance during the month. On the other hand, security selection in Brazil helped on the margin.

From a security lens, an underweight to Brazilian digital banking platform provider, NU Holdings, was the biggest contributor to relative returns after releasing a disappointing set of earnings. No exposure to Brazilian electric equipment firm, WEG, was another relative contributor. The stock fell after their latest earnings report showed a deceleration in both year over year margins and returns on invested capital. Our overweight position to Mexican convenience store operator, FEMSA, also helped after the company reported an acceleration in same store sales growth at their core convenience store Oxxo. Fibra Uno, a Mexican real estate company, was another contributor. The company announced that they would be spinning off their industrial real estate assets, aiding the company's de-leveraging efforts.

On the flipside, our overweight position in Azzas 2154, the Brazilian footwear retailer, was the largest detractor. Lojas Renner, the Brazilian retailer, also hurt performance amidst broker downgrades and after their latest earnings showed a miss on margins versus consensus. Brazilian healthcare operator, Hapvida, also weighed on returns in February following a regulatory hearing about proposed changes by the National Regulatory Agency for Private Health Insurance and Plans (ANS), which could impact the entire healthcare sector.

We made few changes to the portfolio. During February we increased our exposure to copper by adding to Grupo Mexico, a Mexican mining and transport conglomerate. We also increased our exposure to Ero Copper, which is a Canadian listed miner with their main operations in Brazil. Copper stocks have lagged the copper price year to date, but we ultimately believe these stocks will catch up over time. Following a sharp sell-off we re-initiated a position in Globant, an IT services company. Elsewhere, we exited CCU, the Chilean brewer.

Mexico is the largest portfolio overweight as of February end, while the largest underweight is Peru.

Outlook

In Brazil and Mexico, many stocks trade on single-digit multiples while paying double-digit dividend yields This is true for companies as diverse as Mexican bank Banorte, Brazilian natural resource companies Vale and Petrobras as well as real estate developer, Cyrela. The latter, for example, trades on 4x price-to-earnings ratios and pays an 11% dividend yield (consensus estimates).

Meanwhile, at a macroeconomic level the Brazilian real, which declined by more than 20% in 2024, making Brazilian broad-range of exports much more competitive. This together with higher interest rates might lead to a decline in economic activity, less pressure on inflation and thus lower interest rates down the line. This in turn should lift the multiples of equities.

Due to the volatility that Mexico has faced in 2024, the Mexican central bank has been relatively more cautious in reducing rates, finishing the year with its benchmark rate still at 10%, even though inflation has receded to around 4%. We therefore see scope for rate cuts to accelerate in 2025 and support asset price performance. Furthermore, despite the claims of the media, we do not see a major change in the secular trend of nearshoring of supply chains, as Mexico will remain a much cheaper location to manufacture than the United States. Mexico therefore remains our biggest overweight in the fund.

The portfolio is underweight the rest of Latin America to fund these high conviction positions in Brazil and Mexico.

¹Source: BlackRock as at 28 February 2025.

Source: Unless otherwise stated all data is sourced from BlackRock as at 28 February 2025.
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

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.

Sam Vecht is lead 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. Sam joined BlackRock in 2000 in the Global Emerging Markets Team. He has a degree in International Relations and History.

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 the CC Japan Income & Growth Trust plc and was formerly a Director of 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.

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.