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I understand the risk of investing in Latin America at this point of time, both from fundamental and technical perspective. Have said that, I would like to know your recommendation for the best Latin American fund to invest, either Open end, closed-ended or ETF. I do not like growthy oriended funds like Trow Price fund (PRLAX).
I am not sure there is much that is not 'growthy' when it comes to Latin America funds. We have used several over the years, none currently. Diversified LA funds are pretty much dependent on what happens in Brazil. Mexico comes into play some. 11 of the top 20 biggest companies in LA are Brazilian, 6 of the top 10. And they are mostly banks and energy-related companies. Almost all the actively -managed LA funds own many of the same companies - it's hard not to. There is a newer fund EPLAX that owns a number of U.S. and European companies in the LA version, such as Deutsche Bank, Kimberly-Clark, Coca Cola. And it owns almost none of the 'big' LA companies. It's different to be sure, but in this case different has been a plus for investors. No real track record, but it looks to be a contrarian play in terms of holdings.
We have used ILF in the past as a low-cost way to play the LA markets. But have been out for some time. Mexico has some appeal, as does Columbia and perhaps Chile. But Brazil is a problem. So perhaps indexing is not the best option now.
I agree with Scott: diversified EM is my preferred way of getting a little LA exposure, although it's been the bane of SFGIX, the one diversified EM stock fund I own: Andrew Foster says in his Q2 commentary that two LA stocks were responsible for 3/4 of the fund's downside last quarter.
You might look at ECON, EGShares EM Consumer, as an LA-lite option ... 44% or thereabouts in LA, roughly 2.5x the benchmark. (To be interested, you've gotta like consumer staples & discretionary, though!)
Reply to @AndyJ: ECON is an interesting option, given the stated desire (whether you think it's going to be successful or not is another matter) of China to move towards a more consumer/consumption-centric economy. Some of the names included are reasonable, but I think top holding/10% of the fund Naspers (a large part of its business being Chinese internet company Tencent) is getting a bit overheated. I owned it and acted probably a bit early, but sold it a few days ago. I think it's a good long-term story, but thought it'd run up too much in the near-term. I do own second largest holding Ambev. Holding number three, FEMSA, owns a large portion of Coca-Cola FEMSA (Coca-Cola LA, essentially), a stake in Heineken and a rapidly growing convenience store chain called Oxxo, which has 11,000 stores. There's a lot of interesting long-term stories in the fund overall.
Reply to @scott: ECON is run as a concentrated, cap-weighted index (30 stocks), so yep, it's got at least some risk of overvaluation in the top names. Pretty high P/E for an EM stock fund, too ...
I do agree with others that a diversified EM stock fund offers much less specific risk. On the other hand, there are some funds that have an overweighting to LA stocks. The MSCI EM Index has about 16% in LA. Ivy Asset Strategy New Opportunities INOIX and Goldman N-11 Equity GSYIX both have more than 23% currently in LA stocks. So if you really want to have some action there, without going 'all the way in' both of these are worth considering. Good management teams with both.
Along with Scott and AndyJ, I'd recommend an EM fund not restricted geographically. I too own SFGIX and have been disappointed, but not enough to sell it. I'm holding on. Consider that option.
Thank you all and especially BobC (pls. no offense to others). I want to thank him wholeheartedly as he has been a long term contributor of this forum as well as Fund Alarm earlier. I believe he works as investment advisor too, not sure how he gets time to contribute here.
I agree that BobC answers most who direct questions to him and many who ask questions of the board. However, it is a collection of us all that is what makes the board. For you see, if nobody, like yourself, asked a question, then there would be no need for a response.
I too, have been looking over Latin America feeling it has been beat up pretty well ... but, I came to the conclusion that still the best way to play it was through an emerging market type fund ... that was until I read BobC's comment on Ivy Asset New Opportunities fund and think that might be the better way to go. But, before I can make a specality play on Latin America ... I'd have to open a space in my specality sleeve to do so. So until someting in the sleeve falters ... I'll just have to stand back and watch how Latin America pans out knowing I've got money working in Latin America through some of my other positions.
In review, through an Instant Xray analysis, two emerging market funds that are found in mine or my family members portfolios that have note worthy Latin America exposure are DEMAX which has about 30% and THDAX which has about 20%.
Comments
We have used ILF in the past as a low-cost way to play the LA markets. But have been out for some time. Mexico has some appeal, as does Columbia and perhaps Chile. But Brazil is a problem. So perhaps indexing is not the best option now.
You might look at ECON, EGShares EM Consumer, as an LA-lite option ... 44% or thereabouts in LA, roughly 2.5x the benchmark. (To be interested, you've gotta like consumer staples & discretionary, though!)
I want to thank him wholeheartedly as he has been a long term contributor of this forum as well as Fund Alarm earlier. I believe he works as investment advisor too, not sure how he gets time to contribute here.
I agree that BobC answers most who direct questions to him and many who ask questions of the board. However, it is a collection of us all that is what makes the board. For you see, if nobody, like yourself, asked a question, then there would be no need for a response.
I too, have been looking over Latin America feeling it has been beat up pretty well ... but, I came to the conclusion that still the best way to play it was through an emerging market type fund ... that was until I read BobC's comment on Ivy Asset New Opportunities fund and think that might be the better way to go. But, before I can make a specality play on Latin America ... I'd have to open a space in my specality sleeve to do so. So until someting in the sleeve falters ... I'll just have to stand back and watch how Latin America pans out knowing I've got money working in Latin America through some of my other positions.
In review, through an Instant Xray analysis, two emerging market funds that are found in mine or my family members portfolios that have note worthy Latin America exposure are DEMAX which has about 30% and THDAX which has about 20%.
Keep those questions coming.
My best,
Skeeter