Aberdeen Latin American Income Fund (ALAI) aims to provide investors with a total return, with an above-average yield, primarily through investing in Latin American securities. While the portfolio is constructed without reference to any benchmark, the company measures its performance against a composite index (in sterling terms): 60% MSCI EM Latin American 10/40 index and 40% J.P. Morgan Government Bond Index EM Global Diversified (Latin America carve-out).
Investment summary
Aberdeen Latin American Income Fund (ALAI) gives investors exposure to both Latin American equities and government debt, and offers a 4.9% dividend yield. The company is managed by Aberdeen Standard Investments’ (ASI) global emerging markets equities and emerging market debt teams. They are cautiously optimistic on the prospects for Latin America in 2019 (favouring the region above other emerging markets), following a series of headwinds in 2018, including a stronger US dollar, rising interest rates, commodity price volatility and a number of important elections. The managers note that commodity prices are stabilising, there is potential for a weaker US currency as the benefits from stimuli and tax cuts fade, and inflation in Latin America is moderating so central banks are more dovish. An improving economic environment in Brazil could contribute towards more robust earnings estimates and higher equity valuations in the region.
