Holly Mckay
Holly MackayFounder and CEO
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Investing in the smaller markets of Latin America

8 Oct, 2024

Sponsored by BlackRock

BlackRock Latin American Investment Trust

Brazil may be the largest economy and stock market in Latin America, but that is not to say that there aren’t rich investment opportunities across other parts of the region. In countries such as Colombia, Argentina or Chile, investors can get exposure to natural resources, technological innovation and emerging consumer strength. These smaller markets bring a new dimension to the BlackRock Latin American Investment Trust.

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

Many of these opportunities are idiosyncratic and occur in unlikely places. For example, Argentina may not appear to be a natural place to look for investment opportunities. Inflation is running at around 270% year on year [1] and there are multiple economic imbalances. We visited the country in January, a trip that further instilled our cautious view of the market.

However, Argentina is also home to a number of the region’s leading technology companies. This includes a pan-Latin American ecommerce platform, and a global software development company. Neither has anything to do with the fortunes of the Argentinian economy, but both have unique assets and interesting prospects. It takes careful company selection to uncover these options.

Overlooked natural resources providing valuable investment opportunities

The region also offers an abundance of natural resources that are often overlooked. There are well-managed companies that own valuable mining assets, such as gold mines in the region [2].

These unique natural resources are also to be found in Chile. Chile is the world’s largest copper producer, with around one-quarter of the world’s production[3]. It is also the world’s second largest producer of lithium with a 30% share of world production [3]. These resources are vital for the energy transition, with copper playing a vital role in electrification, and lithium an important component in battery technology.

Investment opportunities throughout Latin America

Investment opportunities are also available elsewhere. Columbia saw a significant post-pandemic rebound in its economy but has been forced into a readjustment in 2023 and 2024[4]. However, as inflation slows and interest rates drop, we believe there may be better times ahead [5]. We have a holding in the banking sector, where we believe the improving outlook could boost consumption and support economic activity[6]. It is the same in Panama, where we hold a budget airline, which operates across the whole of Central America. It may benefit from rising consumer wealth across the region.

Mexico may also hold a number of long-term investment opportunities. It is a key beneficiary of the friend-shoring of global supply chains, which is supporting its economy and creating options to invest for growth.

In every case – and in keeping with BlackRock’s broader approach to investing in emerging markets – we balance risk and opportunity. The political and economic backdrop has to be right, and we naturally move away from areas of significant social unrest, or political disruption. The key for investing in fast- growing Latin American economies is to ensure the successes outweigh the failures. In the BlackRock Latin American Investment Trust, we seek to do this through forensic, on-the-ground research and diligent risk management.

There is no guarantee that research capabilities will contribute to a positive investment outcome.

While the investment approach described herein seeks to control risk, risk cannot be eliminated.

For more information on how to access the opportunities presented in Latin America, please visit www.blackrock.com/uk/brla

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[1] AP News - Argentina’s inflation edges up in June, breaking a months-long streak in a blow to President Milei - 13 July 2024

[2] Lundin Gold - Operating one of the highest grade, lowest cost mines in the world - July 2024

[3] International Trade Administration - Chile - Country Commercial Guide - 7 December 2023

[4] Corfi Colombiana - Colombia Country Report 2024: The Last Mile Is The Longest - January 2024

[5] Reuters - Columbia economic growth forecast - 1 April 2024

[6] BlackRock - BRLA annual report and accounts - December 2023

Risk Warnings

Investors should refer to the prospectus or offering documentation for the fund’s full list of risks.

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

BlackRock Latin American Investment Trust specific risks

Counterparty Risk: The insolvency of any institutions providing services such as safekeeping of assets or acting as counterparty to derivatives or other instruments, may expose the Fund to financial loss.

Currency Risk: The Fund invests in other currencies. Changes in exchange rates will therefore affect the value of the investment.

Emerging Markets: Emerging markets are generally more sensitive to economic and political conditions than developed markets. Other factors include greater 'Liquidity Risk', restrictions on investment or transfer of assets and failed/delayed delivery of securities or payments to the Fund.

Gearing Risk: Investment strategies, such as borrowing, used by the Trust can result in even larger losses suffered when the value of the underlying investments fall.

Important Information

This document is marketing material.

In the UK this is issued by BlackRock Investment Management (UK) Limited, authorised and regulated by the Financial Conduct Authority. Registered office: 12 Throgmorton Avenue, London, EC2N 2DL. Tel: + 44 (0)20 7743 3000. Registered in England and Wales No. 02020394. For your protection telephone calls are usually recorded. Please refer to the Financial Conduct Authority website for a list of authorised activities conducted by BlackRock.

This document is marketing material. The Company is managed by BlackRock Fund Managers Limited (BFM) as the AIFM. BFM has delegated certain investment management and other ancillary services to BlackRock Investment Management (UK) Limited. The Company’s shares are traded on the London Stock Exchange and dealing may only be through a member of the Exchange. The Company will not invest more than 15% of its gross assets in other listed investment trusts. SEDOL™ is a trademark of the London Stock Exchange plc and is used under licence.

Net Asset Value (NAV) performance is not the same as share price performance, and shareholders may realise returns that are lower or higher than NAV performance.

The investment trusts listed in this document currently conduct their affairs so that their securities can be recommended by IFAs to ordinary retail investors in accordance with the Financial Conduct Authority’s rules in relation to nonmainstream investment products and intend to continue to do so for the foreseeable future. The securities are excluded from the Financial Conduct Authority’s restrictions which apply to non-mainstream investment products because they are securities issued by investment trusts. Investors should understand all characteristics of the funds objective before investing. For information on investor rights and how to raise complaints please go to https://www.blackrock.com/corporate/compliance/investor-right available in local language in registered jurisdictions.

Any research in this document has been procured and may have been acted on by BlackRock for its own purpose. The results of such research are being made available only incidentally. The views expressed do not constitute investment or any other advice and are subject to change. They do not necessarily reflect the views of any company in the BlackRock Group or any part thereof and no assurances are made as to their accuracy.

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