The new fund aims for growth and income by investing in the equities and related securities of Latin American companies and those based elsewhere with Latin American business activities.
Fund manager Fiona Manning and Aberdeen’s global emerging markets team will take a bottom-up approach to identify quality firms that have sustainable earnings and which are able to withstand difficult economic conditions. Companies with strong balance sheets, sound businesses and proven management that are trading at attractive valuations will be bought and held for the long term.
Aberdeen has invested in Latin America as part of its wider portfolios since the 1980s and has run specialist Latin America portfolios since 2004, so has seen plenty of changes in the region. Tax reforms and sensible government spending policies mean Latin American economies are not saddled with huge debts, and robust financial and banking systems meant the global financial crisis did not have as much impact as it had on. Abderdeen says Latin America is now more stable and less dependent on foreign investment than it used to be. Companies have restructured and cut debts, resulting in improved profitability and earnings.
Being a supplier of commodities has also helped the region’s prospects given the strong demand from other developing countries. The rise of domestic consumption is another factor that is having a positive effect on the region.
Economic and political instability alongside poor corporate governance are still potential risks for investors, but Aberdeen’s experience of the region may provide a comfort factor.