Top Funds for Latin America's Sunny Outlook

After a tough year, the sun is one again shining on Latin America--we take a look at some of the best funds for tapping into the region's growth

Amaya Assan 1 June, 2012 | 2:17PM

The first quarter of 2012 saw most equity markets rally on the back of an improving global growth outlook driven by the US and some degree of resolution of the eurozone debt crisis via the implementation of the Long Term Refinancing Operations (LTROs). Latin American countries benefited from this brightening outlook and the MSCI EM Latin America index outperformed the MSCI World index and the MSCI Emerging Markets index as a result. Although the country fundamentals and the economic outlook within Latin America are somewhat more positive relative to the developed world, Latin American markets still suffered from high levels of volatility caused by the extremely well publicised debt problems in the eurozone over the past year.

Tough 2011, Stronger 2012
2011 was a poor year for emerging markets in general and Latin America as a whole. The MSCI EM Latin America index, which includes Brazil, Mexico, Chile, Colombia and Peru, delivered a negative return of 19.4% (in USD terms) which was largely driven by a very negative performance from the index’s main component Brazil, down 21.8% over the year.

Indeed, Brazil, Chile and Peru, whose stock markets all have significant exposure to mining companies, struggled in the face of weakening global demand for their commodity exports and falling copper prices in the case of Chile. Far-left candidate Ollanta Humala’s victory at the presidential elections in Peru was another source of concern as his proposal of a new tax on miners impacted negatively on valuations.

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About Author

Amaya Assan

Amaya Assan  is a fund analyst with Morningstar OBSR.

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