The demand for Latin American bonds continues to rise and potential returns are following suit.
In the almost six months since we last took a look at the top performing Latin American bond managers, performances have improved.
In our previous analysis only one manager achieved double-digit returns over the previous 12-month period. Fast forward to the end of the year and all but three of the 18 fund managers tracked by Citywire in the emerging markets Latin American bond sector have scored less than the 10% break-off point.
Of course, performance has also been driven by a rising market with the JP Morgan EMBI + Latin index - the benchmark assigned by Citywire to most of the funds in this sector - rising 10.12% between the end of November 2017 and the same time last year.
In this analysis, we take look at the three best performing managers that have outperformed the Citywire-assigned JP Morgan EMBI + Latin index over the past 12 months.
3. Albano Franco – BTG Pactual Asset Management
Kicking off our top three list is BTG’s Albano Franco, who has been running his fund since its inception in March 2013. Unlike the other two funds in this ranking Franco’s focuses exclusively on corporate debt.
He runs a concentrated portfolio of around 25 bond holdings and invests in both local and hard currency issuers.
Among the fund’s top holdings are Chilean casino and hotel operator Enjoy, Brazilian utility group Centrais Electricas Brasiliera and Brazilian beef producer Minerva.
2. Simon Lue-Fong and Mary-Thérèse Barton - Pictet Asset Management
- Fund: Pictet-Latin American Local Currency Debt
- 12-month performance: 14.46%
The London-based duo of Lue-Fong and Barton is second in our ranking and these managers have been running their fund together since its launch in November 2007.
Lue-Fong, the firm’s head of global emerging market bonds, and Barton focus over half of the fund’s portfolio (53%) on Brazil, followed by Mexico (26%) and Colombia (10.9%). The $254 million fund currently has 52 positions and an average duration of four years.
While it invests in local Latin American currencies, the duo has a 16.4% allocation to the US dollar. Just under 55% of the fund is focused on high yield bonds (BB and B paper) with the rest in investment grade paper and a 2% allocation to cash.
1. Tiago Rocheta – Santander Asset Management
- Fund: Santander AM Latin American Fixed Income
- 12-month performance: 16.18%
Topping our list is Tiago Rocheta who runs Santander’s Latin American Fixed Income fund, a vehicle that invests mainly in local currency debt with the option to invest in hard currency.
Rocheta has been at the helm of the Luxembourg-domiciled fund since the end of 2011 and his largest exposure, unsurprisingly, is toward Brazil. The Latin American giant accounts for over 36% of his geographical allocation, followed by Mexico at 23.7% and Colombia at 21.6%.
He holds predominantly sovereign bonds from the region’s largest economies and is currently underweighting government bonds from Peru and Chile.