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Latin American trusts dance to different beat

The Investment Management Association is set to scrap the Latin America sector two years after its launch following a dramatic slump in the number of funds investing principally in the region.

In what will be the third move of its kind in around a year, the IMA plans to close the sector as the number of funds it contains have halved since launch to seven – short of the 10 it requires to support a stand-alone sector.

The IMA has abolished the global equity & bond and global equity income sectors for the same reason.

The IMA is likely to shunt the remaining funds in the sector – soon to number six as Old Mutual is rolling its trust into the worldwide select equity fund – into the global emerging markets sector, from which the Latin America sector originated.

IFAs believe the risks associated with Latin America have deterred bigger investors and left fund managers with small, uneconomic funds. But they do not see what scrapping the sector will achieve.

Simpsons of Brighton IFA partner Andrew Merricks says: “The reason for having different sectors is so that investors can compare like for like. I do not see how this will help consumers do that.”

An IMA spokeswoman says: “It is probable the sector will close but it has yet to go before the performance review committee.”

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