Investment Management Review
Against the odds, the best Latin American funds posted respectable returns last year. And despite Argentina?s troubles, economic fundamentals in the region?s main markets look strong and stocks and bonds stand to benefit.
Ever since hitting a peak in August 1997, the level of
assets invested in Latin American investment funds has been
trending downward. By March of this year, open-end Latin
American fund assets totaled $1.4 billion, only a quarter of
their size five years ago, according to Merrill Lynch.
Investors have simply lost interest in these dedicated Latin
American funds and now tend to prefer a more diversified
strategy that spreads both risk and opportunities for gain
across multiple markets and regions of the world. But dedicated
funds can still be a good vehicle for investors who want to
remain focused on Latin America and who are convinced of its
long-term growth prospects, driven by a continued downward
trend in inflation and interest rates in key markets. Yet
investors' faith was tested severely in 2001, a particularly
difficult year as Latin American equity and fixed income
markets suffered. Economic recession...
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