Fernando X. Donayre,

Chief Investment Officer,

INCA Investments LLC, USA

With local economies proving resilient in the face of global economic headwinds and posting growth rates well above their developed counterparts, Latin America remains one of the best emerging market opportunities for investors. Investing in Latin American equity and bond markets, the WIOF Latin American Performance Fund offers investors access to a region where demographics, economic strength and a burgeoning middle class are combining to produce rapid consumer growth and an attractive investment environment.



Latin America’s attractiveness for investors has grown enormously in recent years. Political stability and orthodox economic policies have ushered in a boom that is creating new opportunities for regional companies and increasing the size and affluence of the middle class. More than 50% of the population in major Latin American countries is middle class and consumption-oriented companies are set to be among the biggest beneficiaries as per capita incomes and middle income groups’ purchasing power continues to rise. The increased buying power of Latin Americans has also boosted domestic consumer demand and expanded demand for credit, creating expansion and investment opportunities in financial services. At the same time, the region is showing its resilience compared to other more export-driven economies which are suffering in the global turndown.



While Europe’s economies hover on the brink of recession and major world exporting nations are hit by the downturn in demand from one of their biggest export destinations, Latin America is less dependent on its exports being absorbed by Europe because of their geographic diversification while its main economies are also more domestic market-driven than export-driven. This means that the health of the region’s economies is relatively protected from external factors. But it also presents the opportunity to add value as investments can be made focusing on what are actually the largest portions of countries’ economies i.e. their domestic markets, rather than simply following Latin American indices dominated by commodity companies whose movements are influenced mainly by external, rather than regional, factors.


Latin America is also an attractive investment proposition because of its relative economic strength compared to the world’s most developed economies:


  • It has considerably lower public and private debt levels.
  • It has a highly-capitalized banking sector which holds very little European debt.
  • Most importantly, regional growth rates are considerably stronger - GDP growth in Latin America is expected to be almost four times that of Europe and at least one per cent more than that of the US in 2013, according to the International Monetary Fund (IMF).


Favourable demographics are also set to keep driving the region’s economic growth story forward. A regional baby boom during the 1990’s guarantees that in the coming decades a high percentage of its population will be working-age consumers with above-average spending power.


Latin American Population Breakdown



Individually, all the Fund’s key investment countries have good fundamentals and investment potential:


  • Brazil’s unemployment rate is at a record low while poverty rates have plunged and the middle class is expanding by millions of people per year. Economic growth, while not spectacular in 2012, is expected to be back to at least 4% in 2013.
  • Mexico has an improving economy and its proximity and close economic ties to the US are a long-term competitive advantage. Meanwhile, its companies are attractive for their favourable long-term outlooks and reasonable valuations while recent reforms have further enhanced the investment environment.
  • Peru’s projected economic growth rates of 6% to 2017, according to the International Monetary Fund (IMF), make it one of the most promising economies in Latin America.
  • Chile is expected to be the best managed economy in Latin America for some time to come.


As the Fund’s portfolio manager, Fernando X. Donayre, says: “Over the long-term, Latin American economies’ strong underpinnings bode well for the region’s investment prospects.”



The Fund is managed to take maximum advantage of the opportunities on offer in the region. The Fund manager’s investment decisions are based on bottom-up, fundamental research with a focus on companies rather than countries. Stocks are picked from companies with strong business franchises using a long-term investment horizon. Companies with below average and reasonable valuations are favoured to give the optimum probability of positive risk/reward scenarios.



Latin America’s economies and capital markets continue to develop and display long-term potential. The most recent such example has been the Mexican manufacturing story – the country’s manufacturing exports have grown 17% per year in the last three years. Its increased export competitiveness will continue to be Mexico’s main investment driver for some time to come. While Brazil has short-term economic hurdles to overcome, the outlook for its long-term growth and prospects remains optimistic and good investment opportunities that excessively discount short-term macroeconomic concerns are still to be found. Meanwhile, other countries in the region are also expected to have some of the highest growth rates in Latin America. And while Latin America’s short-term prospects appear very favourable, regional economies’ strong underpinnings bode well for investment prospects over the long-term as well.



The Fund’s investment adviser is Latin American investment specialist INCA Investments. INCA is comprised of a group of dedicated regional investment professionals including senior investment staff who haave been investing in Latin American markets since the early 1990’s as well as a team of seasoned analysts who are specialists in the region’s most important sectors.


IMPORTANT NOTE: This report has been prepared for information only, and it does not represent an offer to purchase or subscribe to shares. World Investment Opportunities Funds (“WIOF”) is registered on the official list of collective investment undertakings pursuant to part I of the Luxembourg law of 17 December 2010 on collective investment undertakings as an open-ended investment company. WIOF believes that the information is correct at the date of production while obtained from carefully selected sources considered to be reliable. No warranty or representation is given to this effect and no liability can be assumed for the correctness or accuracy of the given information which may be subject to change at any time, without notice. Past performance provides neither a guarantee, nor an indication of future performance. Value of the shares and return they generate can fall as well as rise. Currency fluctuations, either up or down, may also affect value of the investment. Due to continuing market volatility and exchange rate fluctuations, the performance may be subject to significant changes over a short-term period. Investors should be aware that shares in the financial instruments entail investment risks, including the possible loss of the invested capital. Performance is usually calculated on the basis of the relevant NAV unless stated otherwise. Performance shown does not take account of any fees and costs associated with subscribing or redeeming shares. It is assumed that all dividends were reinvested. WIOF prospectus is available and may be obtained through www.1cornhill.com. Before investing in any WIOF Sub-fund(s) investors should contact their financial adviser/legal adviser/tax adviser and refer to all relevant documents relating to the WIOF and its particular Sub-fund(s), such as the latest annual report and prospectus that specify the particular risks associated with the Sub-fund, together with any specific restrictions applying, and the basis of dealing. In the event investors choose not to seek advice from a financial adviser/legal adviser/tax adviser, they should consider whether the WIOF is a suitable investment for them.