The Fidelity Advisor Latin America Fund Class A (FLFAX) fell 2.8% in November 2015 from a month prior. In the three- and six-month periods ended November 30, the fund fell 4.8% and 20.4%, respectively. In the one-year period, it plunged 33.0%, and from November’s end until December 24, the fund fell 5.9%. In the YTD (year-to-date) period, the one we’ll be analyzing, the fund has returned -26.2%.
The fund has features in the middle of the pack for almost all periods compared to the eight funds under review. Let’s look at what has contributed to its average performance.
Portfolio composition and contribution to returns
FLFAX has been around for over five years. It was launched in September 2010. According to its latest geographical disclosure, Brazil, Mexico, and Chile are the fund’s top three invested geographies, in that order, making up 84.7% of its assets.
Since the latest complete portfolio of the fund available with us is as of October 2015, we’ll consider that to be our base. For November, we’ll consider valuation changes for our analysis. All portfolio percentages mentioned from here on refer to their weights as per changes in valuation from October to November.
Financials, the fund’s second-biggest contributing sector, was mainly responsible for its average performance in the YTD period ended November 2015. The preference shares of Itau Unibanco Holding (ITUB) led the sector’s negative contributing stocks, followed by the preference shares of Banco Bradesco (BBD).
The materials sector was a distant second to the financials sector in terms of negative contributions to FLFAX’s returns. Both regular and preference shares of Vale (VALE) were major negative contributors from the sector. Compañía de Minas Buenaventura (BVN) and CEMEX Latam Holdings were noteworthy detractors as well. Fibria Celulose (FBR) was the sole positive contributor, but its contribution was dwarfed by the negative contributions of others and was of no practical significance.
The consumer staples sector was led downward by Companhia Brasileira de Distribuicao (CBD) and Ambev (ABEV). However, Walmart de Mexico, the sponsored ADR (American depositary receipt) of Fomento Económico Mexicano (FMX) and Compania Cervecerias Unidas (CCU), among others, contributed positively and reduced the negative returns posted by the sector.
Similarly, the negative returns from the industrials sector were reduced by a positive contribution from Grupo Aeroportuario del Pacífico (PAC).
Reasons for average performance
The financials and materials sectors significantly hurt FLFAX. However, as noted above, a few positive contributors from other sectors were able to reduce the drags on their respective sectors, thus helping the fund contain its losses and post an average performance for the YTD period through November 2015.
Let’s move on to the JPMorgan Latin America Fund A (JLTAX) in the next article.