The Deutsche Latin America Equity Fund Class A (SLANX) seeks long-term growth of capital by investing “in Latin American common stocks and other equities (equities that are traded mainly on Latin American markets, issued or guaranteed by a Latin American government or issued by a company organized under the laws of a Latin American country or any company with more than half of its business in Latin America).”
The asset manager defines Latin America as “Mexico, Central America, South America and the Spanish-speaking islands of the Caribbean.” The fund literature states that fund managers focus on three themes while constructing its portfolio:
- Bottom-up research, which means that the fund targets companies with strong fundamentals
- Growth-orientation, which means that the fund looks for growth-oriented companies
- Analysis of regional themes, which means that the fun seeks stocks that may benefit from social, economic, industrial, and demographic changes
SLANX’s assets were invested across 50 holdings as of September 2015, when it was managing assets worth $211.75 million. As of September, its equity holdings included Empresa Nacional de Electricidad SA (EOC), Cencosud SA (CNCO), CorpBanca (BCA), and Gerdau SA (GGB), which make up a combined ~7.9% of the fund’s portfolio.
For this analysis, we’ll be considering SLANX’s holdings as of August 2015, as this is the latest sectoral breakdown available to us as of October 2015. The fund’s holdings after August reflect valuation-driven changes to the portfolio, not the actual holdings.
Here’s a breakdown of SLANX’s sectoral holdings:
- The consumer staples sector is the biggest sectoral holding of the fund. It is followed by financials. Combined, these two sectors formed 67% of the fund’s portfolio.
- Consumer discretionary is the only other sector that has been allocated over 10% of the fund’s assets.
- The fund has not invested in the healthcare sector in the past year.
- The managers exited the energy sector after June 2015 and the telecom services sector after January 2015.
Now let’s look at the adjustments made to sectoral exposures in the fund during our period of analysis:
- Over the course of the year that ended in September 2015, the consumer discretionary sector saw its share increase in the fund’s pie. But the increased exposure to consumer staples stocks was much sharper.
- Though exposure to financials stood at over 30% as of September 2015, the sector’s exposure was at over 38% in November 2014.
- Information technology stocks saw their shares steadily increase since September 2014.
- The case of materials is interesting. Its exposure stood at 2.7% in September 2014 but then rose to 8.5% by February 2015. As of August 2015, it had dropped to 5.8%.
But how did this portfolio composition impact SLANX’s performance as of September 2015? Continue to the next part of this series to find out.