Fund of the Week: upbeat on Latin America

Despite the recent stockmarket turmoil, which, as usual, hit emerging markets harder than their developed peers, Will Landers of Merrill Lynch Latin America Trust remains upbeat on prospects for the region. He points out to Investment Week that Latin American markets are among the cheapest in the world, despite falling government debt, sliding inflation and the commodity boom.

Landers has played these trends well over the past three years – the trust has returned 196.5% against a 60.7% return on its benchmark. The key to his success, he says, has been investing in top-performing small- and mid-cap stocks in the region’s three top markets: Brazil, Mexico and Chile. Brazil dominates the fund, accounting for 60% of its holdings. Landers is confident that the Brazilian Central Bank will continue to cut interest rates and so plans to keep playing consumer demand and credit growth in the year ahead, through stocks such as Banco Bradesco and Companhia de Bebidas das Americas, a Brazilian beverages group.

Landers is less upbeat on Mexico, which is too exposed to the fortunes of the US and could be hurt if oil prices fall further, he tells Bloomberg. However, the trust has bought into Mexican housebuilders – in fact, real-estate outfit Corporacion Geo is among its top holdings. “We expect growth in home ownership to remain strong throughout President Calderon’s term, with an annual growth forecast to exceed 15% during the next few years,” he tells Investment Week.

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Merill Lynch Latin America Trust top ten holdings

Name of holding                        % of assets

Petroleo Brasileiro SA ADR              12.09%
America Movil SA ADR                    8.27%
Companhia Vale do Rio Doce           5.74%
Banco Bradesco                            5.18%
Cemex SAB De C                           3.77%
Tenaris SA                                   3.21%
Wal-Mart de Mexico                       3.06%
Companhia De Bebidas                    2.90%
Usinas Siderurgicas De Minas            2.29%
Corporacion Geo                            2.22%


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