Last checked at 19 Jun 2019 11:02
BlackRock Latin American Investment Trust Plc - Portfolio UpdateBlackRock Latin American Investment Trust Plc - Portfolio Update
PR Newswire
London, June 18
BLACKROCK LATIN AMERICAN INVESTMENT TRUST PLC (LEI: UK9OG5Q0CYUDFGRX4151)All information is at 31 May 2019 and unaudited.Performance at month end with net income reinvested
| One month % | Three months % | One year % | Three years % | Five years % | |
| Sterling: | |||||
| Net asset value^ | 1.8 | 1.3 | 17.5 | 68.1 | 29.1 |
| Share price | -4.2 | 1.6 | 19.2 | 59.7 | 22.7 |
| MSCI EM Latin America (Net Return)^^ | 1.3 | 1.2 | 14.2 | 64.9 | 25.7 |
| US Dollars: | |||||
| Net asset value^ | -1.6 | -4.0 | 11.2 | 45.4 | -3.0 |
| Share price | -7.3 | -3.7 | 12.9 | 38.1 | -7.9 |
| MSCI EM Latin America (Net Return)^^ | -2.0 | -4.1 | 8.2 | 42.8 | -5.5 |
^cum income
^^The Company’s performance benchmark (the MSCI EM Latin America Index) may be calculated on either a Gross or a Net return basis. Net return (NR) indices calculate the reinvestment .of dividends net of withholding taxes using the tax rates applicable to non-resident institutional investors, and hence give a lower total return than indices where calculations are on a Gross basis (which assumes that no withholding tax is suffered). As the Company is subject to withholding tax rates for the majority of countries in which it invests, the NR basis is felt to be the most accurate, appropriate, consistent and fair comparison for the Company.
Sources: BlackRock, Standard & Poor’s Micropal
| At month end | |
| Net asset value – capital only: | 532.24p |
| Net asset value – cum income: | 534.46p |
| Share price: | 460.00p |
| Total Assets#: | £226.3m |
| Discount (share price to cum income NAV): | 13.9% |
| Average discount* over the month – cum income: | 10.5% |
| Net gearing at month end**: | 7.1% |
| Gearing range (as a % of net assets): | 0-25% |
| Net yield##: | 5.4% |
| Ordinary shares in issue (excluding 2,181,662 shares held in treasury): | 39,259,620 |
| Ongoing charges***: | 1.0% |
#Total assets include current year revenue.
##The yield of 5.4% is calculated based on total dividends declared in the last 12 months as at the date of this announcement as set out below (totalling 32.11 cents per share) and using a share price of 579.78 US cents per share (equivalent to the sterling price of 460.00 pence per share translated in to US cents at the rate prevailing at 30 April 2019 of $1.2604 dollars to £1.00).
2018 Q3 interim dividend of 7.57 cents per share (paid on 23 August 2018)2018 Q4 interim dividend of 7.85 cents per share (paid on 9 November 2018)2019 Q1 interim dividend of 8.13 cents per share (paid on 8 February 2019)2019 Q2 interim dividend of 8.56 cents per share (declared on 1 April 2019 and payable on 17 May 2019).\* The discount is calculated using the cum income NAV (expressed in sterling terms).
**Net cash/net gearing is calculated using debt at par, less cash and cash equivalents and fixed interest investments as a percentage of net assets.
*** Calculated as a percentage of average net assets and using expenses, excluding interest costs for the year ended 31 December 2018.
Geographic Exposure
| % of Total Assets^ | % of Equity Portfolio * | MSCI EM Latin America Index | ||
| Brazil | 67.4 | 68.0 | 62.1 | |
| Mexico | 25.6 | 25.8 | 21.3 | |
| Argentina | 4.4 | 4.5 | 2.4 | |
| Chile | 1.7 | 1.7 | 7.6 | |
| Colombia | 0.0 | 0.0 | 3.3 | |
| Peru | 0.0 | 0.0 | 3.3 | |
| Net current assets (inc. fixed interest) | 0.9 | 0.0 | 0.0 | |
| ----- | ----- | ----- | ||
| Total | 100.0 | 100.0 | 100.0 | |
| ----- | ----- | ----- |
^Total assets for the purposes of these calculations exclude bank overdrafts, and the net current assets figure shown in the table above therefore excludes bank overdrafts equivalent to 7.1% of the Company’s net asset value.
| Sector | % of Equity Portfolio * | % of Benchmark |
| Financials | 33.3 | 34.7 |
| Consumer Staples | 14.5 | 15.3 |
| Materials | 13.7 | 14.0 |
| Energy | 11.3 | 10.4 |
| Industrials | 9.0 | 6.1 |
| Communication Services | 5.8 | 6.3 |
| Utilities | 4.6 | 5.6 |
| Real Estate | 3.8 | 1.3 |
| Consumer Discretionary | 2.5 | 4.7 |
| Information Technology | 1.5 | 0.7 |
| Health Care | 0.0 | 0.9 |
| ----- | ----- | |
| Total | 100.0 | 100.0 |
| ----- | ----- |
*excluding net current assets & fixed interestTen Largest Equity Investments (in percentage order)
| Company | Country of Risk | % of Equity Portfolio | % of Benchmark |
| Itau Unibanco | Brazil | 10.7 | 6.8 |
| Petrobras | Brazil | 9.5 | 7.6 |
| Banco Bradesco | Brazil | 6.4 | 7.5 |
| Vale | Brazil | 5.4 | 6.2 |
| Femsa | Mexico | 4.7 | 2.8 |
| Grupo Financiero Banorte | Mexico | 4.0 | 2.2 |
| Banco do Brasil | Brazil | 3.9 | 1.8 |
| B3 | Brazil | 3.5 | 3.0 |
| Rumo Logística Operada Multimodal | Brazil | 3.3 | 0.8 |
| America Movil | Mexico | 3.3 | 3.7 |
Commenting on the markets, Ed Kuczma and Sam Vecht, representing the Investment Manager noted;
For the month of May 2019, the Company’s NAV returned 1.8%1 with the share price moving -4.2%1. The Company’s benchmark, the MSCI EM Latin America Index (net basis), gained 1.3%2 (all performance figures are in sterling terms with dividends reinvested).
Latin America outperformed both emerging and developed markets in May, supported by significant outperformance in Argentina following the country’s inclusion into MSCI indices. Subsequently our off-benchmark allocation to the country was a primary contributor to relative returns for the portfolio. Positions in Banco Macro, YPF and Pampa Energia all rallied, supported by passive flows. Underweight positioning in Colombia and Chile benefitted the portfolio amid weak equity markets and currency depreciation. An overweight to Brazil also contributed in May as the market fared well relative to the index, amid forward progression surrounding social security reform. Stock selection, however, led to an aggregate detraction to relative returns. Brazilian rail operator, Rumo, was the month’s best performer on the back of strong volumes. Airline Azul, was another primary contributor, supported by oil weakness and an uptick in Brazilian demand. On the other hand, an underweight to Bradesco and a lack of positioning in food producer, JBS, weighed on returns, the latter of which continues to benefit from the Asian Swine Flu concerns. An off-benchmark position in Brazilian telecom, Oi, was the month’s largest individual detractor.
Aggregate positioning was relatively unchanged, with Brazil still being the Company’s largest overweight. We exited food producer, BRF, after strong outperformance on the back of Asian Swine Flu concerns. We also reduced our Ambev position as we expect margin pressure to increase. On the other hand we looked to put excess cash to work during the month, adding primarily to macro-sensitive financials. Following headlines concerning the possibility of imposed tariffs by the US, we have looked to reduce exposure in Mexico across sectors. The portfolio ended the month being overweight Brazil and Mexico, while being underweight Chile, Peru, and Colombia. We also maintain an off-benchmark allocation to Argentina. At the sector level, we are overweight in the domestic consumer and real estate sectors, whilst being underweight in utilities and financials.
Brazil remains our largest overweight given the increasing prospects for positive structural economic reforms. Despite soft economic activity data, easy monetary conditions and advancements in social security reform remain focal points for our conviction. We maintain a cautious outlook on Mexican equities as the economy slows and trade headwinds stemming from President Trump’s announcement of a progressive tariff on Mexican imports if immigration concerns are not addressed. In Peru, we are underweight as we see negative newsflow on politics as President Vizcarra’s approval rating continue to fall. We remain underweight on Colombia as we see the latest relaxation of the fiscal rule casting a shadow on the country’s commitment to fiscal stability. The Company has recently been reducing our underweight positions in Chilean equities due to increasingly attractive valuations. Finally, the dramatic sell-off in Argentina in 2018 leaves the stocks trading at attractive valuations while inflation and currency concerns have mostly stabilized providing a foundation for the economy to rebound from the recent downturn. May’s MSCI reclassification to Emerging Markets has also helped bring increased demand to the market through approximately US$600m in passive flows.
Sources:1BlackRock as at 31 May 20192Datastream as at 31 May 2019
19 June 2019
ENDS
Latest information is available by typing www.blackrock.co.uk/brla on the internet, "BLRKINDEX" on Reuters, "BLRK" on Bloomberg or "8800" on Topic 3 (ICV terminal). Neither the contents of the Manager’s website nor the contents of any website accessible from hyperlinks on the Manager’s website (or any other website) is incorporated into, or forms part of, this announcement.