We’ll be analyzing the Deutsche Latin America Equity Fund Class A (SLANX) in this article. The Deutsche Latin America Equity Fund is the third-largest fund in this review. It was managing assets worth $189.4 million as of January 2016.
As of December 2015, its assets were spread across 46 holdings and included companies such as Empresa Nacional de Electricidad (EOC), Cencosud (CNCO), CorpBanca (BCA), Embotelladora Andina (AKO.B), and BBVA Banco Francés (BFR), which composed a combined 8.3% of the fund’s portfolio.
From a purely net asset value return standpoint, SLANX was an above-average performer for the one-year period until February 17, 2016, but it was in for difficult times in 2015. It ranked fourth and eighth, respectively, 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’ve chosen two ETFs: The iShares Latin America 40 ETF (ILF) and the iShares MSCI Emerging Markets Latin America ETF (EEML).
SLANX’s standard deviation, or the volatility of its returns, in the one-year period until February 17 is 24.2%. This is lower than the MSCI EM Latin America Gross Return USD Index’s 25.7% but higher than 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 and for 2015. Evaluating a negative Sharpe Ratio may be misleading, so we’ll avoid that.
SLANX’s information ratio, calculated with the MSCI EM Latin America Gross Return USD Index as the benchmark, was 1.1 for the one-year period ended February 17, the second highest in its peer group.[2. The information ratio shows the consistency of a fund manager along with measuring his ability to generate excess returns over a benchmark. The higher the reading, the better the consistency.] For 2015, the fund’s information ratio placed it fourth among its peers.
A note to investors
SLANX was one of three funds to generate a positive alpha for both the one-year period ended February 17 and for 2015. Year-to-date in 2016, its volatility has been lower than all but one of its peers’.
Investors should note that the fund churns its portfolio frequently. Hence, investors should analyze its long-term performance to ensure that these strong numbers are not a one-off.
In the next article, we’ll look at the UltraLatin America ProFund Class A (UBPIX).