LONDON (Alliance News) - Aberdeen Latin American Income Fund Ltd Wednesday reported positive return from its equity and fixed income portfolios in its last financial year, although they lagged their benchmarks.
In a statement, the fund said the equity portion of its portfolio rose by 12.33% in sterling terms in the year ended August 31, trailing the benchmark MSCI Emerging Markets Latin America 10/40 Index's gain of 15.92%. It blamed negative stock selection.
The fixed income portfolio returned 7.51% in sterling terms but a negative contribution from hedging reduced that to 7.04%, an underperformance of 0.55% against the benchmark's rise. The JP Morgan GBI-EM Global Diversified (Latin America) benchmark rose by 7.59%.
"In stark contrast to the stockmarket losses witnessed in the first half of the financial year, Latin American markets appear to be on the road to recovery. However, the region's solid showing masks the diverging prospects of individual nations. Dilma Rousseff's win in the recent elections is likely to weigh on the Brazilian stockmarket in the near term," Aberdeen Asset Managers Ltd said in a statement.
The investment manager also said Rousseff's narrow margin might compel her to tighten fiscal policy and implement the economic adjustments necessary to restore growth and confidence.
"On a brighter note, still-low unemployment should prove supportive for future growth, and a solid pipeline of infrastructure auctions bodes well for investment," Aberdeen Asset Managers said.
The investment manager said it sees value in Latin America despite macroeconomic uncertainty.
"Our investment process continues to allow us to identify companies with the ability to thrive even during leaner periods. Regardless of their domicile, our holdings are characterised by robust balance sheets and adept management; we believe they are poised to maintain earnings growth well into the future. As always, we will take advantage of attractive valuations to add to high-conviction holdings," Aberdeen Asset Managers said.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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