First Latin American equities fund launches

26-Nov-2015

By Sarah Kendell

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Australia’s first managed fund offering access to the equities markets of Mexico, Colombia, Peru and Chile will provide investors new sources of growth and diversification, according to King Irving Funds Management.

Speaking to financialobserver, King Irving managing director Kate Mulligan said the region was a hidden treasure for Australian investors, who traditionally looked no further than Brazil when it came to including South American exposure in their portfolios.

“When it comes to emerging markets in the area Australians have previously looked at Brazil and stopped there, but these countries are responsible for more than 50% of the region’s GDP and are seen by the IMF as its economic star,” Mulligan said .

The King Irving SURA Pacific Alliance Fund would focus on the Pacific Alliance region of countries which together represented a bigger economy than Brazil, and were expected to grow three to four times faster than their emerging market neighbour over the next few years.

Mulligan said since forming the Pacific Alliance trade bloc in 2012, the four economies were starting to reap the benefits of strong consumer demand and free flow of goods and capital across their respective markets.

“Some of the consistent factors across the region are young population demographics and an emerging middle class which is driving demand, similar to what we have previously seen in China,” she said.

“There’s also a very stable regulatory environment, transparent government and a strong banking system, so multiple factors are supporting strong growth.”

Mulligan also cited recent research from economic consultancy Wellershoff and Partners, that had identified Peru and Colombia as two of the top five best-performing emerging markets over the next five years.

After an 18-month selection and due diligence process, King Irving had appointed locally-based asset manager SURA Asset Management Group, the largest pension provider in the Pacific Alliance region, to manage the fund on the ground.

SURA had over $112 billion in assets under management across the region and 17 million clients.

SURA chief executive Andres Castro said the potential for outperformance in the local market was strong.

“Countries in the Pacific Alliance Region share a focus on open trade, regulated markets and rule of law,” Castro said.

“The investment fundamentals combined with these factors make a compelling argument for inclusion of this capability as a strong potential provider of alpha in professional portfolios.”

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