REG-BlackRock Latin American Investment Trust Plc: Portfolio Update
14/04/2025 11:30
The information contained in this release was correct as at 31 March 2025.
Information on the Company’s up to date net asset values can be found on the
London Stock Exchange Website at
https://www.londonstockexchange.com/exchange/news/market-news/market-news-home.html.
BLACKROCK LATIN AMERICAN INVESTMENT TRUST PLC (LEI - UK9OG5Q0CYUDFGRX4151)
All information is at 31 March 2025 and unaudited.
Performance at month end with net income reinvested
One Three One Three Five
month months year years years
% % % % %
Sterling:
Net asset value^ 4.1 10.8 -22.7 -13.1 52.6
Share price -0.3 11.6 -19.2 -15.9 45.3
MSCI EM Latin America 2.3 9.4 -15.4 -3.9 67.8
(Net Return)^^
US Dollars:
Net asset value^ 6.8 14.2 -21.1 -14.8 58.9
Share price 2.2 15.0 -17.5 -17.6 51.2
MSCI EM Latin America 4.8 12.7 -13.6 -5.8 74.7
(Net Return)^^
^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: 341.35p
Net asset value - including income: 344.16p
Share price: 306.00p
Total assets#: £107.6m
Discount (share price to cum income NAV): 11.1%
Average discount* over the month – cum income: 10.6%
Net Gearing at month end**: 7.6%
Gearing range (as a % of net assets): 0-25%
Net yield##: 5.8%
Ordinary shares in issue(excluding 2,181,662 shares held in treasury): 29,448,641
Ongoing charges***: 1.23%
#Total assets include current year revenue.
##The yield of 5.8% is calculated based on total dividends declared in the
last 12 months as at the date of this announcement as set out below (totalling
22.86 cents per share) and using a share price of 394.97 US cents per share
(equivalent to the sterling price of 306.00 pence per share translated in to
US cents at the rate prevailing at 31 March 2025 of $1.2908 dollars to
£1.00).
2024 Q2 Interim dividend of 6.13 cents per share (Paid on 08 August 2024)
2024 Q3 Interim dividend of 6.26 cents per share (Paid 08 November 2024)
2024 Q4 Interim dividend of 4.92 cents per share (Paid on 07 February 2025)
2025 Q1 Interim dividend of 5.55 cents per share (Payable on 15 May 2025)
*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.
*** The Company’s ongoing charges are calculated as a percentage of average
daily net assets and using the management fee and all other operating expenses
excluding finance costs, direct transaction costs, custody transaction
charges, VAT recovered, taxation and certain non-recurring items for the year
ended 31 December 2024.
Geographic Exposure % of Total Assets % of Equity Portfolio * MSCI EM Latin America Index
Brazil 60.4 59.7 61.5
Mexico 31.6 31.2 26.1
Multi-Country 4.3 4.2 0.0
Argentina 2.7 2.6 0.0
Chile 2.3 2.3 6.6
Peru 0.0 0.0 4.1
Columbia 0.0 0.0 1.7
Net current liabilities (inc. fixed interest) -1.3 0.0 0.0
----- ----- -----
Total 100.0 100.0 100.0
===== ===== =====
^Total liabilities 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 6.2% of the Company’s net
asset value.
Sector % of Equity Portfolio* % of Benchmark*
Financials 22.3 32.3
Materials 20.9 16.9
Consumer Discretionary 14.5 1.5
Consumer Staples 12.2 14.4
Energy 7.3 11.3
Industrials 7.3 10.4
Health Care 6.6 0.7
Real Estate 4.9 1.2
Information Technology 2.6 0.5
Utilities 1.4 7.4
Communication Services 0.0 3.4
----- -----
Total 100.0 100.0
===== =====
*excluding net current liabilities & fixed interest
Company Country of Risk % of % of
Equity Portfolio Benchmark
Vale: Brazil
ADS 7.5
Equity 1.2 6.4
Petrobrás: Brazil
Equity 1.2
Equity ADR 3.5 4.7
Preference Shares ADR 2.6 5.2
Grupo México Mexico 5.4 2.8
FEMSA: Mexico
ADR 0.9
Equity 3.8 3.0
Walmart de México y Centroamérica Mexico 4.5 2.6
Grupo Financiero Banorte Mexico 4.3 3.2
Rede D'or Sao Luiz Brazil 4.0 0.7
B3 Brazil 3.7 2.0
XP Brazil 3.7 0.9
Cyrela Brazil Realty Brazil 3.7 0.0
Commenting on the markets, Sam Vecht and Christoph Brinkmann, representing the
Investment Manager noted;
The Company’s NAV rose by +4.1% in March, outperforming the benchmark, MSCI
Emerging Markets Latin America Index, which returned +2.3% on a net basis over
the same period. All performance figures are in sterling terms with dividends
reinvested.1
Emerging Markets rose 0.6% in March outperforming Developed Markets by over
5%, the highest margin since November 2022. Performance in Latin America was
primarily driven by the returns seen in Brazil (6.5% month on month), Peru
(4.9%) and Chile (4.2%).
At the portfolio level, security selection in Brazil and Mexico were the
largest contributors to performance during the month. On the other hand, an
off-benchmark exposure to Argentinian IT stock detracted.
From a security lens, overweight positions to a collection of Brazilian real
estate developers was the largest contributor to returns over the month. Both
EZ Tec and Cyrela performed well after delivering strong fourth quarter 2024
results, where the latter reported net revenues ahead of consensus estimates.
B3, the Brazilian stock exchange, also contributed. The stock bounced
following a favourable ruling from Brazil's Administrative Tax Appeals Board,
annulling fines imposed by the Brazilian tax authorities. Our underweight
position to digital banking platform provider, NU Holdings, also continued to
aid relative performance during March.
On the flipside, our overweight position in IT services firm, Globant, was the
worst performer over the month. The IT services sector more broadly performed
poorly on the back of US growth concerns. XP, the Brazilian investment
management platform, was another detractor amidst a short seller report
accusing the company of financial misconduct. We believe the allegations to be
unfounded and therefore currently have maintained our position. Our
underweight position to JBS, a Brazilian meatpacker, also detracted. The
company's share price jumped to a 5-year high following news of a potential
listing in New York.
We made few changes to the portfolio in March. We took profits and reduced our
position to Mexican miner, MAG Silver. We also reduced our exposure to B3
following strong performance. We took advantage of the global sell-off in the
IT services sector to add further to our Globant position. We also added to
Azzas 2154 as we believe the stock was oversold.
Mexico remains the largest portfolio overweight as of March end, while Peru is
the largest underweight.
Outlook
With Donald Trump securing a second term, there is potential for an
acceleration in the already shifting geopolitical landscape. The President has
been clear on his “America First” policy since his inauguration, which in
our view is supportive of our “World in 3” narrative where we see a world
splitting into three groups: those aligned with China, those aligned with the
US and the rest (neutrals). We believe that neutral countries, many of which
are in Latin America, will continue to benefit from increased geopolitical
polarization through increased FDI (Foreign Direct Investment) as new
alliances are forged.
Meanwhile, at a macroeconomic level, the Brazilian Real, which declined by
more than 20% in 2024, has made a broad range of Brazilian exports much more
competitive. This, together with higher interest rates, might lead to a
decline in economic activity, less pressure on inflation and thus lower
interest rates down the line. This in turn should lift the multiples of
equities. Given cheap valuations, we also see the potential for share buybacks
supporting the market in 2025. As such, we see several bottom-up opportunities
in domestic Brazil, focusing on companies with lower leverage and stronger
earnings outlook.
Due to the volatility Mexico faced in 2024, the Mexican central bank had been
relatively cautious in reducing rates. As we entered 2025, we anticipated
further rate cuts, which most recently materialized in a 50 basis points cut
in March, bringing the policy rate down to 9%. We see scope for further rate
cuts in 2025, which should support asset price performance. Furthermore,
despite the claims of the media, we do not see a major change in the secular
trend of nearshoring of supply chains, as Mexico will remain a much cheaper
location to manufacture than the United States. Mexico therefore remains our
biggest overweight in the fund.
The portfolio is underweight the rest of Latin America to fund these high
conviction positions in Brazil and Mexico.
1Source: BlackRock, as of 31 March 2025.
14 April 2025
ENDS
Latest information is available by typing www.blackrock.com/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.
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