BLACKROCK LATIN AMERICAN INVESTMENT TRUST PLC (LEI: UK9OG5Q0CYUDFGRX4151)
All information is at31 December 2018 and unaudited.
Performance at month end with net income reinvested
One month |
Three months |
One year |
Three years |
Five years |
|
Sterling: | |||||
Net asset value^ | -0.1 | 7.3 | 0.6 | 77.3 | 24.7 |
Share price | 2.9 | 8.9 | -1.0 | 73.1 | 22.0 |
MSCI EM Latin America (Gross Return)^^ |
-0.6 | 2.9 | -0.4 | 77.1 | 21.1 |
MSCI EM Latin America (Net Return)^^ |
-0.6 | 2.8 | -0.8 | 75.3 | 19.2 |
US Dollars: | |||||
Net asset value^ | -0.3 | 4.7 | -5.4 | 53.0 | -4.1 |
Share price | 2.8 | 6.3 | -6.9 | 49.4 | -6.3 |
MSCI EM Latin America (Gross Return)^^ |
-0.7 | 0.5 | -6.2 | 53.1 | -6.9 |
MSCI EM Latin America (Net Return)^^ |
-0.8 | 0.4 | -6.6 | 51.5 | -8.4 |
^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. Historically the benchmark data for the Company has always been stated on a Gross basis. However, as disclosed in the Company’s Interim Report for the six months ended 30 June 2018, it is the Board’s intention to monitor the Company’s performance with reference to the NR version of the benchmark. For transparency both sets of benchmark data have been provided.
Sources: BlackRock, Standard & Poor’s Micropal
At month end | |
Net asset value – capital only: | 507.77p |
Net asset value – cum income: | 510.62p |
Share price: | 437.50p |
Total Assets#: | 220.5m |
Discount (share price to cum income NAV): | 14.3% |
Average discount* over the month – cum income: | 15.9% |
Net gearing at month end**: | 8.8% |
Gearing range (as a % of net assets): | 0-25% |
Net yield##: | 5.4% |
Ordinary shares in issue (excluding 2,181,662 shares held in treasury): | 39,259,620 |
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 (comprising, the 2017 final dividend of 7.00 cents per share, the first interim dividend under the new policy of 7.57 cents per share paid on 23 August 2018, the second interim dividend under the new policy of 7.85 cents per share paid on 9 November 2018 and the third interim dividend under the new policy of 8.13 cents per share declared on 2 January 2019 and payable on 8 February 2019) as a percentage of month end share price. As previously announced, the Board of the BlackRock Latin American Investment Trust plc have introduced a new dividend policy whereby the Company will pay regular quarterly dividends equivalent to 1.25% of the Company’s US Dollar cum income NAV on the last working day of December, March, June and September each year, with the dividends being paid in February, May, August and November each year respectively. The yield on the Company’s shares projecting future quarterly dividends forward based on the August and October 2018 paid dividends and 2 quarters being paid at the same rate as the declared January 2019 dividend, based on the Company’s share price at 31 December 2018 converted to US dollars at the exchange rate on 31 December 2018, would be 5.69%.
*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.
*** Calculated as a percentage of average net assets and using expenses, excluding interest costs for the year ended 31 December 2017.
Geographic Exposure
% of Total Assets | % of Equity Portfolio * |
MSCI EM Latin America Index |
||
Brazil | 72.4 | 73.1 | 61.5 | |
Mexico | 21.2 | 21.5 | 22.8 | |
Chile | 3.1 | 3.2 | 8.9 | |
Colombia | 1.4 | 1.4 | 3.3 | |
Argentina | 0.8 | 0.8 | 0.0 | |
Peru | 0.0 | 0.0 | 3.5 | |
Net current liabilities (inc. fixed interest) | 1.1 | 0.0 | 0.0 | |
----- | ----- | ----- | ||
Total | 100.0 | 100.0 | 100.0 | |
----- | ----- | ----- |
Sector | % of Equity Portfolio * | % of Benchmark |
Financials | 32.9 | 33.6 |
Materials | 17.1 | 16.4 |
Consumer Discretionary | 11.1 | 5.2 |
Consumer Staples | 9.2 | 14.6 |
Energy | 9.0 | 9.8 |
Industrials | 8.7 | 6.2 |
Communication Services | 6.0 | 6.9 |
Utilities | 2.9 | 4.9 |
Information Technology | 2.2 | 0.5 |
Health Care | 0.8 | 0.5 |
Real Estate | 0.1 | 1.4 |
----- | ----- | |
Total | 100.0 | 100.0 |
----- | ----- |
*excluding net current assets & fixed interest
Ten Largest Equity Investments (in percentage order)
Company |
Country of Risk | % of Equity Portfolio |
% of Benchmark |
Banco Bradesco | Brazil | 9.2 | 7.2 |
Itau Unibanco | Brazil | 9.0 | 7.6 |
Petrobras | Brazil | 9.0 | 7.2 |
Vale | Brazil | 8.7 | 7.1 |
America Movil | Mexico | 4.8 | 4.1 |
Femsa | Mexico | 3.6 | 2.8 |
Lojas Renner | Brazil | 3.1 | 1.3 |
Grupo Financiero Banorte | Mexico | 3.1 | 2.2 |
B3 | Brazil | 3.0 | 2.4 |
Walmart de Mexico y Centroamerica | Mexico | 2.8 | 2.3 |
Commenting on the markets, Ed Kuczma and Sam Vecht, representing the Investment Manager noted;
For the month of December 2018, the Company’s NAV returned -0.1%1 with the share price rising by 2.9%1. The Company’s benchmark, the MSCI EM Latin America Index, fell by 0.6% (on both a net and gross basis)2 (all performance figures are in sterling terms with dividends reinvested).
Our overweight positions and selections within Brazil were the primary drivers of returns during the month and performance remained resilient supported by stable economic activity. Consumption oriented names such as payment name, Linx, and retailers, Renner and B2W, performed well with B2W demonstrating its ability to maintain sales growth. A lack of positioning in beverage company, Ambev, was the largest individual contributor in December. On the other hand our holdings in Mexico weighed on performance in aggregate. Energy-related names, Petrobras and Ultrapar, were among the worst performers falling alongside declines in the oil price. Similarly, Vale and steel producer Gerdau, detracted from performance on commodity price weakness.
During the month we trimmed some Brazilian exposure following strong relative performance in the region. On the other hand we added to Mexico as the market remained weak on what we believed to be overly negative sentiment. This positioning was rewarded on the back of a responsible budget proposal for 2019. Broadly, we have been active in taking profits across our positions and redeploying capital on market dips. More recently we have also trimmed exposure across the resource sectors. The portfolio ended the period being overweight Brazil, while being underweight Chile, Peru and Colombia, and maintaining a relatively neutral stance on Mexico. We continue to maintain an off-benchmark allocation to Argentina through software exporter, Globant. At the sector level, we are overweight the domestic consumer, while being underweight staples and utilities.
Brazil remains our largest overweight, given our positive expectations for the incoming administration. So far President-elect, Jair Bolsonaro, has delivered on his campaign promises, looking to reduce the size of the government by initially reducing the number of ministries, naming sector/subject experts to lead cabinets, and pointing to a continuation of the reform process initiated two years ago. Meanwhile, the outlook for upcoming corporate results point to a continuation in the economic recovery, providing strong momentum for growth into 2019. Elsewhere, the cancellation of NAIM (New Mexico International Airport) reminded markets of the concerns regarding increasing populism for the incoming administration in Mexico, reinforcing our cautious view on Mexican equities. We remain underweight the Andean region due to a combination of unattractive valuation and disappointing growth. Finally, the dramatic sell off in Argentina in 2018 leaves the stocks trading at attractive valuations while interest rates and the currency have mostly stabilized providing a foundation for the economy to rebound from recent downturn.
Sources:
1BlackRock as at 31 December 2018
2Datastream as at 31 December 2018
18 January 2019
ENDS
Latest information is available by typing www.blackrock.co.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.