Source - PRN

All information is at31 March 2018 and unaudited.

Performance at month end with net income reinvested   

Net asset value^ -1.9 6.0 11.2 43.8 3.0
Share price -0.6 4.3 11.6 41.2 1.0
MSCI EM Latin America -2.7 4.3 6.7 42.7 0.0
US Dollars:
Net asset value^ -0.1 9.9 24.8 35.9 -4.7
Share price 1.2 8.2 25.2 33.5 -6.7
MSCI EM Latin America -0.9 8.1 19.7 34.9 -7.6

^cum income

Sources: BlackRock, Standard & Poor’s Micropal

At month end
Net asset value – capital only: 548.69p
Net asset value – cum income: 556.38p
Share price: 480.00p
Total Assets#: £239.4m
Discount (share price to cum income NAV):  13.7%
Average discount* over the month – cum income: 14.2%
Net gearing at month end**: 9.7%
Gearing range (as a % of net assets): 0-25%
Net yield##: 2.0%
Ordinary shares in issue***: 39,369,620
Ongoing charges****: 1.1%

#Total assets include current year revenue.
##Calculated using total dividends declared in the last 12 months as at the date of this announcement as a percentage of month end share price.
*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.
***Excluding 2,071,662 shares held in treasury.
**** Calculated as a percentage of average net assets and using expenses, excluding performance fees and interest costs for the year ended 31 December 2017.

Geographic Exposure

% of Total Assets % of Equity
Portfolio *
American Index
Brazil 68.4 68.2 60.1
Mexico 22.0 21.9 23.5
Argentina 4.9 4.9 0.0
Chile 3.4 3.4 9.7
Peru 1.6 1.6 3.3
Colombia 0.0 0.0 3.4
Net current liabilities (inc. Fixed interest) -0.3 0.0 0.0
----- ----- -----
Total 100.0 100.0 100.0
----- ----- -----


Sector % of Equity Portfolio * % of Benchmark
Financials 31.4 32.2
Materials   17.3       16.2
Consumer Staples 12.3 15.8
Consumer Discretionary 10.8 4.9
Energy 10.1 9.7
Telecommunication Services 7.1 6.4
Industrials 6.1 6.0
Utilities 2.3 5.4
Real Estate 1.1 1.4
Health Care 0.9 0.9
Information Technology 0.6 1.1
----- -----
Total 100.0 100.0
----- -----

*excluding net current liabilities & fixed interest

Ten Largest Equity Investments (in percentage order)


Country of Risk
% of
Equity Portfolio
% of
Itau Unibanco Brazil 8.6 7.3
Petrobras Brazil 7.7 6.7
Banco Bradesco Brazil 7.7 6.9
Vale Brazil 7.6 5.9
America Movil Mexico 5.5 4.6
AmBev Brazil 5.1 5.0
Femsa Mexico 3.4 2.6
B3 Brazil 3.1 2.4
Grupo Financiero Banorte Mexico 2.5 2.2
Rumo Logistica Operada Multimodal Brazil 2.5 0.6

Commenting on the markets, Will Landers, representing the Investment Manager noted;

For the month of March 2018, the Company’s NAV fell by 1.9%* with the share price falling by 0.6%*. The Company’s benchmark, the MSCI EM Latin America Index, fell by 2.7%* (all performance figures are in sterling terms with income reinvested).

Brazil was the best performing market in the region on the back of falling inflation and further central bank rate cuts, which contributed to the overall improved investor sentiment and good market performance. A resolution on the situation with respect to ex-president Lula was welcomed positively by investors. Our stock selection within Brazil and the overweight portfolio position in this country were the month’s top contributors to performance. The absence from the portfolio of Cielo (the Brazilian card operator and the biggest payment system company in Latin America) was the largest contributor to relative returns as the stock declined over the month. The position in airline Azul also contributed to relative returns given improved demand for air travel as the Brazilian economy recovers. Stock selection in Mexico was also another contributor to relative performance. The overweight in America Movil contributed to relative returns as the stock was up on the back of a proposed dividend payment and a share buy-back. Our lack of positioning in the Mexican media name Televisa was a strong contributor to relative performance after the company reported weak numbers with poor forward looking expectations. On the other hand, our lack of position in Colombia detracted significantly as the country performed well in March. Our off-benchmark position in Argentina detracted during the month due in part to investor profit taking.

Positioning remained relatively unchanged during the quarter. We notably took down some risk in Brazil, specifically reducing exposure to Arezzo and Raia Drogasil, while also exiting our position in Kroton. We also increased our exposure to copper on the back of more positive pricing dynamics for the sector, initiating a position in Antofagasta. We increased our holdings in recently IPO’d (Initial Public Offering) Argentine airport operator, Corporacion America Airports, as we believe the shares to be trading at an attractive valuation. The Company ended the month being overweight in Brazil, while being underweight in Chile and Colombia.  We also maintained an off-benchmark allocation to Argentina. At the sector level, we are overweight in domestic consumer and materials, whilst being underweight in utilities and consumer staples.

Our positioning and outlook remain unchanged. Brazil remains the Company’s top overweight position.  The main driver for earnings growth in Brazil has been the economic recovery - persistently low inflation has allowed the Central Bank to continue it easing cycle, which has set the foundation for the recovery (the Central Bank cut rates another 25 bps in March, bringing the SELIC (Sistema Especial de Liquidação e Custodia, the Brazilian Central Bank interest rate) down to 6.5%, a new record low, still leaving room for another cut if inflation continues to come in below target). The reform agenda continues to be a focus, although pension reform will only be considered after the October elections. Our underweight in Mexico is driven by concerns regarding the July presidential elections; while recent news on NAFTA (North American Free Trade Agreement) appear to lead to a successful renegotiation, timing for such an agreement is still unknown given the political calendar on both sides of the border.  We maintain our cautious view on Mexican growth, and therefore our underweight position.  We continue to underweight Chile due to rich valuations and lack of free-float liquidity, and have become more cautious on Peru given disappointing growth figures. We continue to favour Argentina as that economy continues on its recovery path.  At the sector level, we are overweight consumer discretionary, materials and energy while underweight consumer staples and utilities.

*Source: BlackRock as of 31 March 2018

13 April 2018


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