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Invesco Perpetual Latin American fund

17th July 2013 Print

Andy Parsons, head of investment research at The Share Centre, considers a current contrarian investment idea, the Invesco Perpetual Latin American fund as his fund in focus.

"In the current climate the thought of investing in emerging markets is likely to raise concerns and reservations about venturing into the unknown.
 
"Funds with exposure to these regions have suffered significantly in terms of overall performance and re-direction of capital recently as investors have looked for safer and less volatile investment options.
 
"One country that has been at the forefront is Brazil. Recent headlines have clearly shown Brazil suffering from civil unrest, as protestors took to the streets to vent their anger at rises in transportation costs, potential corruption and the state of public services. This was mainly due to the nations focus on other key strategic infrastructure issues, such as the forth coming 2014 World Cup and 2016 Olympics.
 
"Also, the US has sparked global concern over the potential tapering of its current QE program during the latter part of 2013, volatility and investor angst in regions such as Latin America is likely to intensify in the short term. 
 
"However, for those investors brave enough to withstand short term volatility and appreciate the longer term benefits Latin America has, the potential future rewards may be significant. The region has an abundance of hard raw materials, basic and precious metals and oil, and when added to the massive production of agrarian and soft commodities, and the World's continuing dependence on them, the investment opportunity becomes easier to understand. Based on population growth and the expansion of economies like China and India, the World's thirst for these commodities will only continue to grow, albeit at a potentially slower rate than previously witnessed.
 
"Despite the number of countries within the region, investment in Latin America still principally focuses on two countries, namely the fifth largest country in the world, Brazil and Mexico. Opportunities do exist within other countries, and investors are likely to find the manager having holdings in countries such as Chile, Columbia and Peru.
 
"The Invesco Perpetual Latin American fund is an ideal way to invest in this region and has been managed by Dean Newman since its launch back in November 1994.
 
"The fund invests in approximately 50 - 60 companies, favoring large and mid-cap companies. Dean combines elements of both stock picking, seeking those investments that exhibit strong fundamentals, whilst also considering the broader economic environment in his decision making process."