Argentina has caught the attention of Latin American fund selectors as a top investment opportunity, but the jury is still out on whether it's a compelling business destination.
In a poll Wednesday at Citywire’s fund selector event in Montevideo, more than 59% of the 59 respondents chose Argentina as the Latin American country they’ll bet on next year.
Brazil came in next, with almost 41% of respondents saying they’ll back it. Interest in other countries such as Mexico was small by comparison. Some respondents picked more than one answer.
While drawn to invest in Argentina, selectors had mixed responses on whether their firms were planning to offer investment products and services in that market. Close to 29% said it wasn’t in their plans to set up shop in Argentina, but 20% said they were were working on launching in the country.
Meanwhile, another 26% said their groups weren’t thinking of entering now but might in the future, and a final 17% said they were actively examining the opportunity.
Emerging markets ranked as the top equity opportunity for selectors, 51% of whom said they were planning to increase to up their allocation to that asset class in the next six months.
European equities came in second with the support of almost 36% of respondents, and Asia third with almost 19%.
On the fixed income side, selectors also picked emerging markets as their top bet, with roughly 52% saying they were planning to up their allocation to that asset class in the next six months.
High-quality credit came in as a not-so-close second at 17%, followed by high yield, corporate bonds and investment grade.
For non-traditional assets, 36% of selectors favored hedge funds, making it the top category they said they would increase their alternatives allocation to in the next 12 months.
Three asset classes were in a tight race for runner-up, with selectors almost evenly split between private debt, private equity and real assets.
Bracing for risk
Half of the selectors picked North Korea’s nuclear arsenal as the most concerning geopolitical risk, over closer-to-home dangers such as the political crises Brazil and Venezuela.
The second top worry came from the US, with 20% of respondents saying they were uneasy about president Donald Trump’s tweets, which have sparked controversy among political and diplomatic circles.
In addition, close to 17% showed concern about the political crises in Venezuela and Brazil and roughly 12% about the Brexit negotiations.