BlackRock Latin American Investment Trust (BRLA) is managed by Ed Kuczma and Sam Vecht. The managers are constructive on the outlook for Latin American equities, believing the favourable interest rate environment is supportive for consumption growth. They seek high-quality businesses that are able to grow earnings and cash flows over the economic cycle. The managers have reduced the trust’s cyclical exposure, focusing more on companies with internal growth drivers and attractive dividend yields. Following the adoption of a new, higher dividend policy in FY18, BRLA currently offers a c 6% dividend yield.
Latin American equities look more attractively valued versus the world market compared to their 10-year average. While 2019 economic growth estimates for the region have been revised lower, partly due to the US-China trade dispute, there is potential for higher growth in coming quarters. Brazil is the dominant economy in Latin America and its interest rates are at record lows, which should be very supportive of future consumption growth.
Highly experienced co-managers, who are able to draw on the broad resources of BlackRock’s investment teams. Relatively concentrated portfolio of Latin American equities, diversified by geography and sector (45 stocks, down from c 55 a year ago). Regular quarterly dividends equivalent to 1.25% of $ NAV at the end of each calendar quarter; attractive c 6% dividend yield.
BRLA is currently trading at a 12.5% share price discount to cum-income NAV. This is modestly narrower than the 13.1%, 13.5% and 12.9% average discounts over the last one, three and five years respectively. BRLA has a formulaic dividend policy based on the value of its quarter-end NAV, and currently yields 5.9%.