Latin America - The strength of the consumer

The Gartmore SICAV Latin America Fund is ranked in the top quartile in its sector year-to-date. Chris Palmer, Gartmore's Head of Global Emerging Markets, reports on the strength of the consumer which has been driving Latin American markets strongly during 2010.

The combination of demographic shifts and the onset of wage increases have led to a rising group of consumers in Latin America. No longer is the focus in the region solely on commodities. The domestic demand story is compelling. The middle income and lower-middle income classes are reaping the benefits of improving credit conditions and a stable economy. As the consumer benefits from higher disposable incomes, the demand for big ticket items (for example white goods and automobiles) rises unabated. As companies position themselves to meet this new level of demand, we continue to target all opportunities which seek to exploit this phenomenon.

In exploiting this new dynamic, the Gartmore SICAV Latin America Fund has moved nimbly into topping up positions in companies with exposures to the growing consumer sector and buying new positions where unexpected earnings growth has become most prevalent. Most recently, the Fund increased its stake in the Brazilian beer giant Ambev and added the Mexican personal care company Genomma. Genomma is a high growth, high return company focusing on providing value for money products in O-T-C healthcare and personal care.

The Fund has also taken the opportunity to top up its key positions in Brazil Foods, CBD, Lojas Renner, Walmart de Mexico and Brazilian retailer, Marisa after the latter reported strong Q1 numbers. Marisa's sales trends remain strong and we believe the company is well-positioned to capture the growth of the emerging middle-class consumer, who should drive the growth for apparel retailers. The company is continuing its aggressive store opening plan which remains on track so far this year.