BlackRock Latin American Investment Trust plc

About this 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.

The Company aims to secure long-term capital growth and an attractive total return primarily through investing in quoted securities in Latin America.

Why choose it?

Latin American countries hold a wealth of opportunities for long-term investors keen to participate in the region's growth and diversity. Our experienced team draws on its extensive network in the region to uncover the most compelling opportunities across a variety of countries and sectors.

Diversification and asset allocation may not fully protect you from market risk.

Suited to…

Investors with a long-term horizon who want to include Latin American shares in their portfolio and are able to tolerate periods of market volatility in pursuit of capital growth. This means shares prices may rise and fall more frequently.

What are the 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.
• Overseas investment will be affected by movements in currency exchange rates.
• Emerging market investments are usually associated with higher investment risk than developed market investments. Therefore the value of these investments may be unpredictable and subject to greater variation.
• Investment strategies, such as borrowing, used by the Trust can result in even larger losses suffered when the value of the underlying investments fall.

Useful information

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.

Fees & Charges

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ESG Integration

The fund noted above does not commit to sustainable criteria nor does it have a sustainable investment objective.

BlackRock considers many investment risks in our processes. In order to seek the best risk-adjusted returns for our clients, we manage material risks and opportunities that could impact portfolios, including financially material Environmental, Social and/or Governance (ESG) data or information, where available. See our Firm Wide ESG Integration Statement for more information on this approach and fund documentation for how these material risks are considered within this product, where applicable.

Fund manager commentary

31 January 2025

Comments from the Portfolio Managers

Please note that the commentary below includes historic information in respect of the performance of portfolio investments, index performance data and the Company’s NAV and share performance.

The figures shown relate to past performance. Past Performance is not a reliable indicator of current or future results.

The Company’s NAV rose +11.5% in January, outperforming the benchmark, MSCI Emerging Markets Latin America Index, which returned +10.4% on a net basis over the same period. All performance figures are in sterling terms with dividends reinvested.¹

Emerging Markets (+1.8%) posted moderate gains in January, but still underperformed Developed Markets which rose +3.6%. Latin America recorded a strong recovery in January at +9.5%, led by Colombia (+21.2%). Chile also performed well, rising by 8.8%.² In Chile, the pension reform was approved by the Chamber of Deputies with 110 votes in favour and 38 against, thereby bypassing a mixed commission. The proposal now advances to the Constitutional Court for review before it can be enacted into law. Brazil also saw a welcome reversal after a tough 2024, outperforming both Latin America and broader Emerging Markets by posting gains of +12.4% over the month.

At the portfolio level, stock selection in Brazil and an underweight to Peru were the key positive contributors to performance. On the other hand, an overweight to Mexico and an underweight to Colombia hurt.

From a security lens, a collection of domestic Brazilian names did well. The biggest contributor to returns over the month was an overweight to Cyrela, the Brazilian real estate developer. The company rose on the back of strong fourth quarter 2024 operating data that showed a +90% increase in sales year-on-year. Another stock that did well was Azzas 2154, the Brazilian footwear retailer, rising with the Brazilian stock market. Not owning Mexican telecom company América Móvil was also additive, as the stock declined following broker downgrades. An overweight position in EZ Tec, a Brazilian homebuilder, also helped as the stock bounced back following a weak December.

On the flipside, an overweight position in Becle, a Mexican tequila producer, was the largest detractor on the back of disappointing sales volumes in the US and poor fourth quarter 2024 guidance from the company. Our underweight to NU Holdings, a Brazilian digital banking platform provider, was another detractor. While the underweight has been additive to returns over the past months, the stock rebounded somewhat along with the Brazilian market. An overweight to Walmart Mexico also hurt returns in January, as the consumption outlook in Mexico remains lacklustre.

We made few changes to the portfolio in January. In Mexico, we rotated some exposure from Banorte to convenience store operator FEMSA. FEMSA has underperformed, but is a defensive position with a sizeable USD cash position on its balance sheet. We initiated a position in Ero Copper, which is a Canadian copper miner with their main operations in Brazil, reflecting the team's positive view on the commodity. We also exited IRB, the Brazilian reinsurance company, after the stock reached our target price.

Mexico is the largest portfolio overweight as at the end of January. Brazil is our second largest overweight. On the other hand, the largest underweight is Peru. The second largest portfolio underweight is Chile.

Outlook

We remain optimistic about the outlook for Latin America. While 2024 has been a difficult year for the region, we are now entering 2025 with many asset prices trading at attractive levels. Robust growth in the US paired with the election of Donald Trump has catapulted bond yields in the US higher over the recent months, despite the reduction in rates by the US central bank. This has been a headwind for asset prices outside the US. However, as contrarian investors, we always like to ask ourselves the question, how much is already priced in?

We believe the answer to that question is: a lot. In Brazil, many stocks trade on single-digit multiples while paying double-digit dividend yields. For instance, Cyrela, the Brazilian real estate developer and a big holding of ours, trades on 4x price-to-earnings and pays an 11% dividend yield (consensus estimates). 5-year inflation-protected bonds in Brazil now offer a yield north of 7% and two year sovereign bonds have a nominal yield of circa 15%. The Brazilian Real also declined by 23% in 2024, making Brazilian exports much more competitive.

¹Source: BlackRock as at 31 January 2025
²Source: MSCI
Source: Unless otherwise stated all data is sourced from BlackRock as at 31 January 2025.

Any opinions or forecasts represent an assessment of the market environment at a specific time and are not intended to be a forecast of future events or a guarantee of future results.

This information should not be relied upon by the reader as research, investment advice or a recommendation.

Risk: Reference to the names of each company mentioned in this communication is merely for explaining the investment strategy, and should not be construed as investment advice or investment recommendation of those companies.

Portfolio manager biographies

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.

Sam Vecht is lead manager of the BlackRock Latin American Investment Trust plc. He is Head of the Emerging Europe, Frontiers and LatAm team within the Fundamental Active Equity division of BlackRock's Active Equities Group and is responsible for managing long-only and long/short portfolios in both Emerging and Frontier markets. He is also co-manager of the BlackRock Frontiers Investment Trust plc. Sam joined BlackRock in 2000 in the Global Emerging Markets Team. He has a degree in International Relations and History.

Christoph Brinkmann is deputy manager of the BlackRock Latin American Investment Trust plc. He is Vice President in the Global Emerging Markets Equities Team who has covered multiple sectors and countries across the Latin American region. He joined BlackRock in 2015 after graduating from the University of Cologne with a Masters in Finance and a CEMS Masters in International Management.

Board of directors

Carolan Dobson (Chairman) was appointed as a Director on 1 January 2016 and as Chairman on 2 March 2017. She is the former Head of UK Equities at Abbey Asset Managers and former Head of Investment Trusts at Murray Johnstone and therefore brings a wealth of industry experience to the Board. She is currently Non-Executive Chairman of Brunner Investment Trust plc and Baillie Gifford UK Growth Fund plc.

Craig Cleland was appointed as a Director on 1 January 2019 and Chairman of the Audit Committee from 31 March 2019. He is Head of Corporate Development/Investment Trusts at CQS (UK) LLP, a multi-asset asset management firm in London with a focus on credit markets, where his responsibilities include advising and developing the closed-end fund business. He is also a Director of Invesco Perpetual Select Trust plc and the CC Japan Income & Growth Trust plc and was formerly a Director of Martin Currie Asia Unconstrained Trust plc. He was previously at JPMorgan Asset Management (UK) Limited, latterly as Managing Director, and led their technical groups in the investment trust business. Prior to that, he was a Director and Senior Company Secretary at Fleming Investment Trust Management, transferring to JPMorgan Asset Management after Chase Manhattan Bank acquired Robert Fleming Holdings Limited.

Laurie Meister was appointed as a Director on 1 February 2020. Ms Meister has 32 years of financial markets experience, both in New York and in London, with 28 years dedicated to having led and developed Latin American equity and capital markets businesses and other emerging markets. Her most recent position was as the Director of Latin American equity sales for European institutional clients for Deutsche Bank from 2008 to 2018. Prior to this she worked for J.P. Morgan Chase as a Director with responsibility for rebuilding the Cemea (Central and Eastern Europe, Middle East and Africa) equity business and then became the Senior European Equity Director for their Latin American equity business. Her initial experiences in the Latin American equity arena included the European start up in the early 1990s of the Merrill Lynch Latin American research sales operation. She then moved as a Managing Director to Robert Flemings in 1995 where she co-led the start-up of their Latin American trading sales and research operations across the region. Ms Meister has a B.A. from the University of Pennsylvania and an M.B.A. in Finance from the New York University Stern School.

Nigel Webber was appointed as a Director on 1 April 2017. Mr Webber’s broad investment experience has seen him lead the design of investment solutions for affluent and high-net-worth individuals across global markets and multiple asset classes. Most recently, he was Global Chief Investment Officer for HSBC Private Banking where he held global responsibility for all investment activity for Group Private Banking. During his time at HSBC, Mr Webber was also Chairman of the Global Investment Committee for Group Private Bank and Chairman for HSBC Alternative Investments Limited. Prior to this, he held a number of blue-chip executive positions around the world for investment and asset management businesses. He is also a qualified accountant.