We’ll be analyzing the Bradesco Latin American Equity Fund Retail Class (BDERX) in this article. The Bradesco Latin American Equity Fund was managing assets worth $10.6 million as of January 2016.
As of December 2015, its assets were spread across 51 stock holdings and included companies such as América Móvil (AMX), Petrobras (PBR), Grupo Aeroportuario del Sureste (ASR), BRF (BRFS), and Ultrapar (UGP). These stocks made up a combined 13.5% of the fund’s portfolio.
From a purely net asset value return standpoint, BDERX was a below-average performer for both the one-year period until February 17, 2016, and for 2015. It was placed sixth for both these periods among its peer group.[1. When we refer to the peer group, we mean the group of nine funds chosen for this review.]
For return comparison, we have chosen two ETFs: The iShares Latin America 40 ETF (ILF) and the iShares MSCI Emerging Markets Latin America ETF (EEML).
BDERX’s standard deviation, or its volatility of returns, in the one-year period until February 17 is 22.0%. This is lower than both the MSCI EM Latin America Gross Return USD Index’s 25.7% and the peer group’s average of 23.6%.
The fund’s risk-adjusted returns, calculated via the Sharpe Ratio, were negative for both the one-year period ended February 17 as well as for 2015. Evaluating a negative Sharpe Ratio may be misleading, so we’ll avoid that.
The information ratio, calculated with the MSCI EM Latin America Gross Return USD Index as the benchmark, was 0.6 for the one-year period ended February 17, placing it fifth among all the funds in this review.[2. The information ratio shows the consistency of a fund manager along with the measure of his ability to generate excess returns over a benchmark. The higher the reading, the better the consistency.] For 2015 as well, the fund’s information ratio ranked fifth among its peers.
A note to investors
BDERX’s alpha was negative for both the one-year period ended February 17 and for 2015. This placed it as a below-average performer. Year-to-date in 2016, the fund’s standard deviation has shot up, showing its susceptibility to volatility.
Investors should note that BDERX’s portfolio turnover is quite high. Should you decide to reinvest in Latin America, you may consider this fund only if you wish to spread your assets across funds focused on this region.
In the next article, we’ll look at the Epiphany FFV Latin America Fund Class A (ELAAX).