The Aberdeen Latin American Equity Fund Class A (ALEAX) fell by 6.3% in September 2015 from the previous month. In the three- and six-month periods ending on September 30, the fund fell by 20.1% and 18.6%, respectively. In the YTD (year-to-date) period, the fund was down by 26.1%. However, from the end of September until October 28, the fund rose by 6.0%.
The fund’s performance has been very consistent—the third-least decliner across all periods except one, among the nine funds we’re analyzing in this series. For the one-month period ending in September, the fund stood fourth among the other funds.
Let’s look at what contributed to ALEAX’s consistent performance.
Portfolio composition and contributions to returns
ALEAX has the least track record among all the funds in this review, having been in existence since only March 2013. According to its latest geographical disclosure, Brazil, Mexico, and Chile are the top three invested geographies, in that order, making up over 90% of the fund’s assets.
Below is s breakdown of the portfolio’s composition and contributions as of September 2015:
- With financials and consumer staples forming over 60% of the portfolio, movements in stocks from these sectors pretty much determine where the fund’s performance is headed.
- Industrials is the only other sector whose exposure reads in double digits, making up ~13% of the fund’s assets.
- With investor mood sour, financials emerged as the biggest negative contributor to the fund’s returns in September 2015. Banco Bradesco SA (BBD) single-handedly contributed nearly half of the sector’s negative contribution. Itaú Unibanco Holding SA (ITUB) was another major negative contributor from the sector.
- Even though the consumer discretionary sector formed less than 10% of the fund’s assets, it emerged as the second-biggest negative contributor to the fund’s returns. Brazilian department stores clothing company Lojas Renner SA led the negative contributors from the sector. Brazilian footwear manufacturer Arezzo Industria e Comercio SA followed as the second-biggest negative contributor.
Reasons driving performance
ALEAX was able to post a decent performance in September 2015 because consumer staples, which forms over 30% of the fund’s portfolio, did not perform as bad as consumer discretionary or materials did, which make up a smaller portion of the portfolio. In other words, ALEAX’s poorly performing sectors had smaller shares, thus leading to less drag on the fund’s overall performance than if they’d had bigger shares.
Continue to the next part of this series for a look at the second fund in our review, the Epiphany FFV Latin America Fund Class A (ELAAX).