The demand for emerging market bonds has been steadily rising over the past year with Latin American debt increasingly gaining investors' attention.
US groups like JP Morgan Asset Management have also got in on the action and launched their own Latin American bond funds.
Over the past year, only one fund manager has managed to produce double-digit returns in the Latin American bond sector. Of the 19 managers tracked by Citywire running a fund over the analysis period, five managers outperformed the average manager return of 7.66% by the end of June this year.
Here are the three top performing managers in this sector over the past year.
3. Felipe Rojas – LarrainVial
- Fund: LarrainVial AM – Latin American High Yield Bond/LarrainVial Bonos Latam
- 12-month return: 8.66%
Kicking off our top three ranking is Felipe Rojas, who has been running both the Ucits and Chile-domiciled versions of his fund since it launched in September 2013.
The Chilean group’s fund invests in US dollar-denominated debt of Latin American companies, with around 30% based locally and 70% in the rest of Latin America. The fund’s largest exposure is toward the financial sector, which accounts for around 27% of its portfolio, with energy next in line at over 21%.
Over 40% of the bonds in the fund have a duration of between 3-6 years while around 33% have one of between 6-9 years.
2. Jose Zitelmann/Albano Franco – BTG Pactual
- Fund: BTG Pactual SICAV – Latin American Corporate Debt
- 12-month return: 9.77%
Manager duo Zitelmann and Franco have been running their corporate debt fund since its initial launch in March 2013.
The fund’s largest country exposure is toward their group’s home nation of Brazil at 40%, which represents an underweight of over 6 percentage points compared to its benchmark. Next in line is Chile at 19% and Mexico at around 15%.
In terms of sector allocation, financials comes top at 21% but is also an underweighted position. The fund's largest overweight allocation is in retail at 21%, over 16 points more than the benchmark.
1. Marco Salin – EuroAmerica
- Fund: EuroAmerica AM SICAV – Latin American High Yield Bond
- 12-month return: 10.7%
Topping our ranking is Marco Salin of Chilean group EuroAmerica Investments. Salin has been running the fund since it was launched in January 2015.
The latest available factsheet dates back to January this year but it gives a good idea of how Salin has structured his portfolio. His largest country exposure at that time was toward Brazil (37%), followed by Mexico (18.5%) and Argentina (11%).
His sector exposure saw him allocate 26% to the financial sector, with energy coming in second at 19.5%, followed by consumer non-cyclicals at 12%.