JPMorgan Brazil is the only investment trust focused on Brazil, and one of the few UK domiciled funds available to private investors that does this. The investment trust only launched two years ago though since then its net asset value (NAV) has outperformed its index, MSCI Brazil 10/40 Index (£). However, the trust's share price has not.
But it is too soon to judge the trust as it aims for long-term total returns with the potential for income, and emerging market investments in general are a long-term play.
The trust is focused on companies which should benefit from domestic economic growth and its managers say the best opportunities are among mid-caps. They hold companies with strong cash generation which they expect to benefit from the eventual rebound in Brazilian economic activity. This is reflected in the trust's exposure to the consumer sector which includes shopping malls, as they are a good inflation hedge, and certain industrial companies. These areas are among the largest overweight positions in the portfolio.
The trust's holdings include Fleury which provides medical imaging, clinical testing and preventive medicine programmes, and has long-term potential as the health care sector is expected to grow. Industrial group Ultrapar is involved in the fuel distribution market and its management is enhancing the distribution network with the addition of convenience stores.
The trust has an ongoing charge of 1.58 per cent which while more expensive than some investment trusts, is much cheaper than that on many open-ended active funds focused on a specialist area, and reasonable if the trust grows strongly over the years to come.
JPMORGAN BRAZIL (GB00B602HS43) | |||
| PRICE | 83.2p | GEARING | 98% |
| AIC SECTOR | Country Specialists: Latin America | NAV | 90.68p |
| FUND TYPE | Investment trust | PRICE DISCOUNT TO NAV | 7.14% |
| MARKET CAP | £49.45m | 1 YEAR PRICE PERFORMANCE | -3.55% |
| SET UP DATE | 26-Apr-10 | 6 MTH PRICE PERFORMANCE | -15.99% |
| ONGOING CHARGE | 1.58% | 3 MTH PRICE PERFORMANCE | 1.76% |
| YIELD | 1.60% | MORE DETAILS | www.jpmorganassetmanagement.co.uk |
Source: Morningstar
Performance data as at 17 August 2012
TOP TEN HOLDINGS as at 30 June 2012
| Companhia de Bebidas das Americas ADR | 5.5 |
| Souza Cruz | 4.9 |
| BRF Brasil Foods ADR | 4.3 |
| BR Malls Participacoes | 4.1 |
| Valid Solucoes e Servicos de Seguranca | 3.7 |
| Raia Drogasil | 3.5 |
| Gerdau Preference | 3.4 |
| Itau Unibanco Multiplo ADR | 3 |
| Iguatemi Empresa Multiplo ADR | 2.8 |
| Eternit | 2.8 |
Sector breakdown
| Financials | 21 |
| Consumer Staples | 18.2 |
| Industrials | 14.9 |
| Consumer Discretionary | 11.6 |
| Materials | 10.1 |
| Utilities | 6.9 |
| Energy | 4.9 |
| Health Care | 3.7 |
| Telecommunication Services | 0.2 |
| Cash | 8.5 |
