BNY Mellon brings LatAm fund to UK market

BNY Mellon Asset Management has launched a Latin America Infrastructure fund through its subsidiary BNY Mellon ARX Investimentos, a Brazilian boutique.

The long-only equity fund was initially launched in August, but the group has now added a sterling share class and has begun marketing the portfolio to UK investors.

The fund invests primarily in companies associated with infrastructure including capital goods, transportation, steel, telecommunications and energy, with particular focus on Brazil, Mexico, Chile and Peru.

Manager Bruno Garcia runs the fund as a concentrated portfolio of between 35 and 50 stocks, with risk controls in place including limits on sector and company weightings.

It aims to outperform the MSCI Latin America 10/40 index over a three to four-year period.

Alex Gorra, BNY Mellon ARX's head of international platform, says the manager targets stocks expects to benefit from sharp increases in spending on Latin American infrastructure.

The fund has 70% to 80% in Brazil and Mexico, but Garcia avoids dominant stocks in the index, such as Petrobras and Vale, neither of which it holds.

The portfolio is poised to benefit from increased infrastructure spend prior to the Olympic Games and the World Cup, Gorra says. The Brazilian government is expected to spend $161bn is on Brazilian infrastructure by 2013, 37% more than between 2005 and 2008.

Gorra says thematic emerging market funds are the logical next step in EM investing, after BRIC and GEM funds.

"Latin America and Brazil are not passive plays because there is a disconnect between their high weightings in commodities stocks, and the locally-focused stocks that are growing."

Future launches are likely to include a regulated version of BNY Mellon ARX's Brazil hedge fund, the group says.

The minimum investment in the Latin America Infrastructure fund is £5,000.