First State Latin America fund avoids 'fashionable' Brazil on valuation fears

Soaring stock market performance in Latin America makes it hard to find quality companies at reasonable valuations, especially in Brazil, according to First State's Millar Mathieson.

The co-manager of the £104m First State Latin America fund says although he maintains a sanguine outlook on much of Latin America, he has steered clear of fashionable stocks – particularly in Brazil. The fund is positioned defensively, with no exposure to names such as Brazilian state-owned Petrobras, which constitutes a large proportion of the MSCI Latin American index. “Even in places such as Chile, where we have built a significant exposure since the fund’s inception, there are now limited opportunities,” says Mathieson. “Our investment horizon of three to five years means we di...