Among the most consistent performers of these are Fidelity Latin America, Henderson Gartmore Latin American and Invesco Perpetual Latin America.
Performance of funds vs index over 5-yrs
Source: FE Analytics
While all three – along with their peers – have lagged the MSCI EM Latin America index over the past half-decade, they have generally done better over one and three years.
The $2.4bn Fidelity fund, with a 61 per cent weighting to Brazil, has been the strongest performer over five years.
Run by Alex Duffy and Angel Ortiz it has an FE Risk Score of 133 and four crowns under the FE Crown Fund Ratings system. While it has lagged the MSCI EM Latin America index over five years, it generally has lower risk. Banco Brazil and America Movil are among its top-10 holdings. As might be expected with more specialist funds, the vehicle’s standard initial charge is slightly higher than usual, at 5.25 per cent.
The next best performer over five years is Invesco Perpetual Latin America, which has a 70.6 per cent weighting to Brazil. Managed by Dean Newman, the £428.3m fund is also one of the best-performing Brazil-exposed funds over three years, and fared better than most over the past 12 months, losing just 0.2 per cent.
The £2bn Henderson fund, which features an FE Risk Score of 141, has beaten the index over three years and also lost less in the turmoil of the past 12 months.
The findings come as the commodity-rich country overtook the UK to become the world’s sixth-largest economy. This happened despite Brazil sharply decelerating in 2011, recording its second-worst performance in around 10 years.
"Brazil’s course is set for further dynamism and growth any western European country would envy, and its oil boom is also about to start," said Jerome Booth, head of research at Ashmore Investment Management.
"Relative prices are driving institutional change and in the 20 years since prices were allowed to vary freely in Brazil they have been helping incentivise positive institutional changes. Brazil is a stable country, a largely closed economy, one whose terms of trade are very positive, a net creditor, and a safer sovereign risk than most west European countries."
JO Hambro’s Global Emerging Markets Opportunities fund has recently gone overweight Brazil, with manager James Syme saying monetary policy will continue to be accommodative and that the currency market will be forgiving of any uptick in inflation because Brazilian real interest rates are so high in a global context.
"We see continued rapid growth in credit creation, particularly from the state-owned banks, while investment in the commodity sectors and in infrastructure will support job creation and wages," he explained.