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How Is ALEAX’s Portfolio Positioned Year-to-Date in 2016?

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Aberdeen Latin American Equity Fund overview

The Aberdeen Latin American Equity Fund Class A (ALEAX) seeks long-term capital appreciation “by investing at least 80% of the value of its net assets in equity securities of Latin American companies. Remaining assets may be, but are not required to be, invested in equity securities that are expected to reflect developments in Latin America.”

Fund managers aim to invest across countries from the LatAm (Latin American) region. However, they retain the flexibility of investing a large portion of their assets in a single nation. Managers conduct fundamental analysis to select securities for the portfolio and adopt a bottom-up approach, which focuses on individual stocks instead of sector trends.

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The fund’s assets were invested across 41 holdings as of March 2016, two more than in the last quarter, and it was managing assets worth $3.4 million as of April’s end. As of March, its equity holdings included Embotelladora Andina (AKO.A), Banco Santander-Chile (BSAC), Tenaris (TS), Bancolombia (CIB), and Grupo Financiero Santander Mexico (BSMX). These stocks made up a combined 10.3% of the fund’s portfolio.

Portfolio changes in the Aberdeen Latin American Equity Fund

Financials and consumer staples form the core of ALEAX. These two sectors combined form 60% of the fund’s portfolio. Industrials and consumer discretionary are the only other major sectors whose portfolio weights read in the double digits. ALEAX is not invested in the utilities or telecommunications services sectors.

Compared to the MSCI EM Latin America 10/40 Index, ALEAX is overweight the financial, industrials, consumer discretionary, consumer staples, and healthcare sectors. Meanwhile, it is underweight the information technology and materials sectors.

In the past one year, the fund’s portfolio has not changed much. In the year, its exposure to the consumer discretionary sector fell below the one-tenth of its assets, but this was only due to market movement, as the fund’s management didn’t make any changes to holdings from the sector.

One notable change in the fund’s portfolio in this period was its exposure to the consumer staples sector. Stocks from the sector have fallen from 30% of ALEAX’s assets to one-quarter of its assets.

The fund’s management has shown conviction in its stock picks, which is reflected in its low portfolio turnover rate.

How has ALEAX’s composition impacted its performance in the first part of 2016? Let’s look at that in the next article.

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