As many fund managers move to dampen investor optimism for 2008, BlackRock's Will Landers remains confident his $550m ML Latin American investment trust can deliver returns in excess of 20% this year.
Since assuming control of the closed-end fund in March 2006, Landers and BlackRock’s Latin American team have returned 80.7%, to 31 December 2007.
Landers remains bullish on the opportunities in Latin America, especially Brazil, where 70% of the portfolio is positioned – 5% over the benchmark.
“In earnings growth, it is reasonable to expect another double digit result for Brazil this year. You can’t say that for many markets right now,” he says.
“Brazil is by far the most exciting story in Latin America, with GDP growth at 5% and an investment grade rating expected in Q4 (2008).
“The domestic side of the economy will be the driver for many years to come.”
Landers has gone underweight in Mexico, as 85% of the country’s exports are sent to the US; an economy tipped to plunge into recession.
Meanwhile, Landers admits the trust has some “weighting issues”, as the fund returned 4.1% below the benchmark (48.1%) in 2007.
He attributes much of this underperformance to the trust's ability to only invest 15% in Brazilian oil producing giant Petrobras, a stock which makes up 20% of the benchmark.
Despite the weighting issues and the potential impact of a lengthy US slowdown, Landers remains confident, especially on the impact burgeoning China has on Latin America.
“China is going to be a long term story in the region,” he says. “It’s not that China takes all the Brazilian exports, in fact it is only 6-7%, but China is a major player now for commodities and it is setting the price for the commodities in the region.”
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