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A Look at the Deutsche Latin America Equity Fund

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Deutsche Latin America Equity Fund overview

The Deutsche Latin America Equity Fund (SLANX) seeks long-term capital growth 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).”

SLANX’s asset manager defines Latin America as “Mexico, Central America, South America and the Spanish speaking islands of the Caribbean.”

The fund’s literature states that its management focuses on three things when constructing its portfolio:

  • Looking for companies with strong fundamentals
  • Looking for growth-oriented companies
  • Looking for stocks that could benefit from social, economic, industrial, and demographic changes

The fund’s assets were invested across 50 holdings in June 2016, and it was managing assets worth $292 million as of July’s end. As of August, its equity holdings included Empresa Nacional de Electricidad (EOCC), Cencosud (CNCO), BRF (BRFS), Embotelladora Andina (AKO.B), and Enersis Américas (ENI).

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Portfolio changes in the Deutsche Latin America Equity Fund

Financials and consumer staples are SLANX’s core sectors. These two sectors combined form 63% of the fund’s assets. This is quite the change from our April review, when these sectors formed 77% of the fund’s holdings. The consumer discretionary sector is the only other sector whose portfolio weight reads in the double digits.

Out of the 11 GICS (Global Industry Classification Standard) sectors, SLANX is invested in only eight. It’s not invested in the energy, telecommunications services, or materials sectors.

We’ve looked at SLANX’s quarterly portfolios for the past three years leading up to June 2016. Three years ago, though the fund’s top two sectors were the same as they are now, they were in a different order, with staples leading financials. The technology sector has seen its portfolio weight rise, while industrials has seen its weight fall.

A look at the graph above will show you that except for its two core sectors, SLANX experiments quite a bit with stocks, which is reflected in sharp changes in its sectoral composition. For instance, the fund was last invested in the healthcare sector in 2Q14 and has only recently included stocks from the sector again. The telecommunications services sector has been in and out of the fund quite frequently.

Has this shifting stance worked for SLANX year-to-date? Let’s look at that in the next article.

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