BlackRock Latin American Investment Trust plc (LON:BRLA) invests in Latin America for capital growth, using the full extent of BlackRock’s resources as the world’s largest money manager to generate alpha from stock selection and proprietary macroeconomic analysis.
Since 2018, BRLA has also paid a quarterly dividend set at 1.25% of NAV,equivalent to 5% at a constant NAV. The board can pay this out of capital where necessary, which means the managers can continue to focus on the best growth prospects without having to sacrifice growth for yield. Managers Ed Kuczma and Sam Vecht took over in January 2019. Their aim has been to make the portfolio more active, with individual stock picks more important to performance.
Kepler Analyst Thomas McMahon said, “In US-dollar terms, the Brazilian stock market is at a similar value to what it was in 2005, despite the huge advances the economy has made since then. In our view this is anomalous, and the market could be an intriguing long-term investment. There are also some headwinds: the high exposure of the market to energy, materials and financials means it is cyclical, exposed to the global economy and biased to value. However, all this means that it could be a strong performer in any recovery from the global pandemic crisis – just as it was one of the hardest hit entering the crisis.
BRLA is a highly attractive way to access this opportunity. Its closedended peers look sub-scale after the vicious drawdowns of recent weeks, and BRLA is now extremely cheap by comparison. Furthermore, it offers an attractive yield from a region to which few investors will have any exposure (we note that the region is less than 10% of the MSCI Emerging Markets Index, so few investors will have exposure through their EM funds).
Finally, the experienced management team and deep resources of BlackRock have the potential to be a potent combination. We note that the trust has become demonstrably more active under Ed and Sam, with strong evidence they can add alpha against the benchmark – even if that has been derailed in the short term by unpredictable crises.”
To learn more about the BlackRock Latin American Investment Trust plc please follow this link: blackrock.com/uk/brla
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Disclosure – Non-Independent Marketing Communication. This is a non-independent marketing communication commissioned by BlackRock Latin American. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.