Latin America’s market revival is in full swing as new found confidence in the region’s long-term prospects has risen, leading investors to flock back to its shores in search of high returns.
Countries like Brazil had one of the top performing equity markets in 2016 and despite a couple of hiccups, it has been continuing its rise. Prospects for other countries like Argentina and Peru have also seen investors, both local and international, increase their allocation to Latin America over the past year.
In a rising market, our analysis has shown that only a few managers have managed to outperform the MSCI EM Latin America benchmark over the past 12 months. Of the 72 managers tracked by Citywire, only nine managers outperformed the 27.8% rise of the MSCI index between May 2016 and May 2017.
Over the same period the average manager return in the Latin American equity sector was 20.9%.
Here are the top three returning fund managers of the nine outliers.
3. Thomas Smith
- Fund: Neptune Latin America
- 12 month returns: 31%
Kicking off our top three is Citywire + rated manager Thomas Smith from UK outfit Neptune Investments. Smith has been running the fund since 2011 and is the firm’s head of Latin American equities.
The UK-domiciled fund currently has around $33 million in assets under management and has over half of its assets (53%) invested in Brazil. Its next biggest country allocation is toward Mexico at 26%.
Its top sector allocation is financials at 38%, followed by consumer discretionary at 14% and materials and 13.5%. Among its top holdings we find Banco Bradesco, mining group Vale as well as banking group Grupo Financiero Banorte and Peru’s Credicorp Capital.
2. Warren Skillman – CIBC
- Fund: CIBC Latin America
- 12 month returns: 32.52%
Next is Warren Skillman, who works for Canada’s CIBC. He’s been running his Canada-domiciled fund since 2012 which currently has $14.5 million in assets under management.
Among its top holdings are telecoms group America Movil, Brazilian financial giant Itaú Unibanco and Latin America’s biggest brewer Ambex. Skillman also holds Wal-Mart de Mexico in his portfolio as well as miner Vale and Banco Bradesco.
- Fund: Investec GSF Latin American Equity
- 12 month returns: 36.4%
Topping our ranking of best performing fund managers is Citywire A-rated Rafael Mendoza Grendi. Investec’ Mendoza has been running the fund since January 2016, which currently has $27 million in assets under management.
Once again, Brazil leads the way in country allocation, accounting for 54.5% of the fund’s investments, followed by Mexico at 23%.
Financials also tops its sector exposure at 23%, with consumer staples stocks making 16.5% of the portfolio and materials 15.8%. Its top holding include Grupo Financiero Banorte, energy giant Petrobras and Brazilian logistic company Rumo.