SWIP: Opportunities in Latin America for the long-term investor

Scottish Widows Investment Partnership (SWIP) believes that despite the global economic slowdown, the Latin American economies offer exciting long-term opportunities for investors.

The region's comparative position of low debt, evolving finance sector, growing consumer base and host of infrastructure developments underpin SWIP's belief.

Latin America has not been left unscathed by the impact of the global economic downturn and the recent outbreak of Swine Flu in Mexico has not helped sentiment. However, the authorities have acted swiftly in terms of curtailing the outbreak, with the result being a gradual return to business as usual. Nevertheless, the economic slowdown will have a negative impact on an already tough economic situation. SWIP still believes that some of the major themes that will support economic growth in the region going forward are long-term trends and will not disappear because of this and the ongoing global slowdown.

Jeff Casson, Investment Director, Global Emerging Market Equities at SWIP comments: "Over the last five to ten years, governments in the main Latin countries including Mexico, Brazil and Chile, as well as Peru, have learned from the crises they have experienced in the past. They are much better positioned now to withstand the global slowdown. Despite recent currency volatility, we have seen a steady easing in interest rates, as well as counter-cyclical measures being announced and implemented by governments, which should help support domestic economic growth over this tough economic period."

Based on SWIP's in-house research, the continuing theme of population growth and urbanisation and the subsequent investment required in infrastructure, will be one of the most important themes across markets for the coming decade and SWIP believes a number of exciting opportunities exist across the region for long- term investors.

Jeff Casson continues: "Brazil, for example has seen a burgeoning middle class which has increased by 20 million people over the last two years offering companies the opportunity to access a growing group of aspirational consumers. Relative to their western counterparts, this middle class isn't as extended credit wise, so there is an opportunity for financial services companies to develop their existing range of products and tap into a new set of consumers."

The Scottish Widows Latin American fund is driven on a best ideas approach. At a stock level, SWIP's investment team ultimately identifies stocks that have a defendable market approach, have the opportunity to provide growth and are very cognisant of growing market share. SWIP's stock-picking research process has identified stocks which it believes offer value over the long-term. These include American Movil, the largest wireless company in Latin America and Net Servicos, a Brazilian company which has a network that extends to ten million homes and is well placed to exploit the expanding middle class theme within Brazil.

The Scottish Widows Latin American fund has achieved top quartile performance over the four calendar years - 2005, 2006, 2007 and 2008.