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OP-Latin America

Fiery Latin potential to spice up your portfolio

A single investment in OP-Latin America opens the door to the interesting South American market. The general stabilisation of the economic environment supports a long-term growth story. The market has a favourable long-term outlook and the rise in raw material prices, in particular, boosts the region's economic development.

  • The target market is the Latin American stock market, chiefly Brazil, Mexico, Chile, Argentina, Colombia and Peru.
  • As the portfolio manager, we have selected BTG Pactual Asset Management based on their broad-based local expertise.

OP-Latin America

Online fees and charges

Subscription fee Annual management fee Redemption fee
0,75% 2,20% 0,75%

Agreements under a systematic investment plan are not subject to subscription fees. A performance-based fee is charged, accounting for 15% of the return that outperforms MSCI EM Latin America 10/40 Net TR. The performance-based fee is calculated quarterly. Fund units generate OP bonuses.

Unlike the ageing old continent, Latin America will see steep growth in working-age population in the coming decades. At the same time, the proportion of middle class with their purchasing power expands heavily in countries deriving wealth from raw material reserves. Favourable employment trends and low levels of household debt underpin growth in demand. Hence, especially companies focusing on domestic markets enjoy bright growth prospects. Stabilisation of the region's economic and political environment and the ensuing improved predictability count among factors pleasing investors.

OP-Latin America mainly invests its assets in the stocks of companies in the Latin American market and in other companies which conduct a significant part of their business in Latin America. The fund's major target markets comprise Brazil, Mexico, Chile, Argentina, Colombia and Peru. The fund may also invest in smaller Latin American markets, such as Venezuela and Panama. In addition, it may invest in companies operating in Latin America, for example, through US, Canadian and European stock exchanges.

OP-Latin America suits a risk-tolerant stock investor who believes in Latin American growth in the long term. Since OP-Latin America seeks high returns mainly on emerging stock markets, its value may fluctuate significantly depending on the market situation, and the risk level is as a rule higher than that of funds investing in advanced markets. Changes in foreign exchange rates also affect the fund's value. Although the region's political and economic environment has improved in recent years, it still forms the target market's key risk factor. Materialisation of major political crises could have a significant impact on the fund's value performance and harm the fund's operations. This fund is recommended to an investor who intends to redeem his/her units after nine years at the earliest.

We slightly underperformed in Brazil during February. The main negative contribution to this month’s performance was Lojas Renner (-8.9% in EUR), due to the worse than expected 4Q17 results. Despite healthy sales growth, operating expenses related to the company's future projects limited earnings growth. On the positive side, the main contributions were Gerdau (+15.3% in EUR), Itausa (+4.8% in EUR) and Magazine Luiza (+7.6% in EUR). In the case of Gerdau, the stock was supported by a combination of: (1) strong results in the 4Q17, with emphasis on the recovery of prices and margins in Brazil, (2) discussions about the implementations of tariffs on steel imports in the US, which would benefit the company’s operation in the country, and (3) the continuation of the divestment process with the sale of some plants in the US and non-core assets in Brazil that potentialized the ongoing deleveraging process.

We outperformed in Mexico during February. The main positive highlight was Alsea (+6.3% in EUR) following a better-than-expected 4Q17 report, delivering on its 2017 guidance, which the market had initially seen as optimistic. The results evidenced a recovery in Mexico Same-Store-Sales, which had been temporarily affected by September’s earthquake in the 3rd quarter. Continued unit expansion and resilient sales in all divisions should guarantee another year of double-digits operating earnings growth. We also saw gains from our underweight position in Televisa (-15.7% in EUR) as the company’s 4Q17 advertisement sales once again disappointed expectations falling by 14.7%; the lack of visibility on how this line will perform and their guidance of content cost growth for 2018 during the result’s conference call were also negatively received by the market.

In Chile we performed in in line with the index this month. The fund was positively impacted by our underweight positions in LTM (-3.0% in EUR), COPEC (-5.3% in EUR) and AESGENER (-3.7% in EUR), which were all trading at high multiples. LTM’s strong performance of the last three months came to a halt with the recovery in fuel prices, which could limit the company’s ability to continue its strong margin expansion. Copec, despite a continuous upwards trend in pulp price, was impacted by valuations above 25x P/E. Finally, Aesgener is still being affected by the negative performance of its Alto Maipo project, which has been delayed several times. However, the Fund was negatively impacted by our overweight positions in RIPLEY (-6.7% EUR), HITES (-4.4% EUR) and EMBONOB (-2.4% EUR). These three stocks suffered from their exposure to consumption, despite strong recovery in consumer confidence. We believe this is a short- term issue rather than a change in fundamentals.

OP-Latin America invests widely in Latin America, mainly using direct equity investments. The fund may also use derivative instruments to hedge against market changes, to replace direct investments and to otherwise promote efficient portfolio management. With a long investment horizon of several years, the fund picks high-quality companies of which it has sufficient insight and does not apply predefined sector or style specific weighting. The highly focused portfolio only has around 25 to 40 stocks at a time, with the largest 20-25 holdings representing around 80%.

In practice, the fund's investment policy is independent of its benchmark index. Taking high active risk, the fund aims to generate high excess return compared to the benchmark index and competitors. This setting places high demands on the portfolio manager. The fund's portfolio is managed by BTG Pactual Asset Management whose strong local organisations create added value in the portfolio management process.

More details Basic data, performance and fact figures

Basic data

Fund manager
BTG Pactual Asset Management
Benchmark index
MSCI EM Latin America 10/40
Start date
02.09.2008
ISIN
FI0008813506
fund serie
Accumulation unit
Fund size
104 Meur
Serie value (20.08.)
131,08 EUR
Monthly review
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Rules
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Broschure
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Accumulated profit (19.08)

1mth 3mth 6mth 1 y 3 y p.a. 5 y p.a.
OP-Latin America A -8,91 % +6,01 % -3,13 % +12,11 % +3,22 % +0,88 %
Benchmark -10,11 % +3,42 % -7,14 % +9,61 % +4,91 % +0,04 %

Yearly performance

2014 2015 2016 2017 2018 YTD
OP-Latin America A +5,73 % -15,68 % +19,27 % +9,61 % -3,72 % +9,19 %
Benchmark -0,13 % -23,18 % +34,96 % +8,69 % -1,76 % +6,05 %

Key figures

Volatility 12 m vola 12m Sharpe 12 m
OP-Latin America A 21,28 % 0,59
Benchmark index - -

Owner-customer benefits

  • As our owner-customer, you can buy, sell and switch almost all of our mutual funds with no charges.
  • OP Investment Partner is a service package designed for owner-customers who have assets available for investment. You will get a personal contact person and have access to comprehensive and real-time market information to support your investment decisions.
  • Owner-customers have automatic access to the second fee level on the brokerage fee list, in which the brokerage fee is 0.18% (min. 8 euros) while the fee at the first fee level is 0.2% (min. 8 euros).

OP bonuses

In addition to OP bonuses earned through saving and investment, owner-customer earn bonuses from

  • loans
  • funds in accounts
  • purchases you have paid with the OP-Visa credit
  • insurance premiums for home, family and motor vehicle policies.

OP bonuses are used for the bank’s service charges and insurance premiums.

OP Fund Management Company Ltd manages OP mutual funds.