ALAI aims to provide investors with a total return and 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 America 10/40 Index and 40% JP Morgan Government Bond Index EM Global Diversified (Latin America carve-out).
abrdn Latin American Income Fund’s (ALAI) managers at abrdn Capital International (abrdn) consider that Latin American equity and fixed-income assets are ‘extremely inexpensive’. The region has underperformed both other emerging and developed markets in recent years despite commodity price strength, while the managers believe that Latin American political risk is already priced into the markets. They report that ALAI’s portfolio has significant exposure to positive structural trends such as electrification. As an example, Chile and Peru are leading lithium and nickel producers and these materials are in high demand. The managers suggest that this trend could continue for many decades, given the long-term transition to a greener global economy.