Bestinvest says
This fund benefits from the experience of the First State emerging markets team known for its thorough investment process, which favours good quality companies. The mandate is more orientated towards domestic sectors and rising middle class consumer in the Latin American region and is skewed towards mid and small companies. First State believe that the region’s markets will become more diversified in future as small and mid sized companies outside the resources sector will grow to represent more of Latin America’s market capitalisation. We feel that the fund offers a reasonable risk-return balance for investors in Latin American region.
From 1st January 2012, the fund was soft-closed to new investors due to capacity constraints, which means the full initial charge will apply to any new investments.
The Emerging markets and Asian team at First State considers about 300 Latin American companies investable out of a universe of >1100. The manager's focus is on quality and valuation. An evaluation of company reputation, franchise, company financials, shareholder rights, corporate governance and balance sheet strength narrows the list of investable stocks to about 100 companies. Many ideas are found in the mid caps (market cap $1bn to $5bn) and although some companies have a limited free float, First State's focus on quality and low valuation can be expected to reduce the risks associated with investing in illiquid stocks. The manager pays little attention to the composition of the regional benchmarks and as a result the fund is expected to retain a bias to mid caps. The fund should also retain exposure to smaller markets like Peru, although generally it will mostly invest in Brazil and Mexico which are the deepest and broadest local markets.