(Alliance News) - Aberdeen Latin American Income Fund Ltd on Wednesday said it performed in line with its benchmark in the first half of its most recent financial year as Latin American equities retreated.
The investment trust, which invests primarily in Latin American securities, reported a total return per share of negative 8.0% for the six months ended February 29, while its benchmark returned a negative 8.2% return.
Aberdeen Latin American Income Fund measures itself against a composite benchmark index weighted 60% to the MSCI EM Latin America 10/40 index and 40% to JPMorgan GBI-EM Global Diversified.
The fund's chair, Richard Prosser, explained: "Latin American equities retreated, underperforming the broader emerging markets in the volatile six months under review. Latin American debt markets also struggled as local-currency bonds posted negative returns. An overarching theme was the ongoing dispute between the US and its key trading partners, as well as punitive tit-for-tat tariffs imposed. Faced with the ensuing resultant economic slowdown, global central banks loosened monetary policy. Countries such as Brazil, Mexico and Chile followed suit."
Net asset value per share fell 9.9% to 74.15 pence on February 29 from 82.34p on August 31, the end of its prior financial year.
The company is aiming to pay a minimum dividend of 3.5p per share for its financial year ending August. To this end, it has declared a second interim dividend of 0.875p per share.
"The revenue reserve provides us with up to one years' dividend reserve. The board's current intention is that interim dividends will continue to be paid quarterly, subject to cash levels being sufficient to allow us to do so, and that in the current financial year revenue reserves will be utilised where there is a shortfall in earnings," said Prosser.
Commenting on outlook, Prosser added: "I remain cautious about the near-term outlook for Latin American equities as Covid-19's impact on Latin America and the wider global economy continues to unfold. The intensification of the pandemic, severe financial stress, border closures, country lockdowns and a halt in business activities threaten to drag the region into recession this year."
Prosser went on to express his optimism over "the resilience of the portfolio's underlying holdings" and belief that the company "should continue to deliver robust performance over the coming years".
Shares in Aberdeen Latin American Income Fund were down 2.6% at 42.85 pence in London on Wednesday afternoon.
By Anna Farley; annafarley@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.