BlackRock Latin American Investment Trust (LON:) has two co-managers, Sam Vecht (lead) and Gordon Fraser, who are part of BlackRock’s London-based Emerging Markets & Frontiers team. Although Fraser was appointed as one of the trust’s managers relatively recently in April 2025, he has worked with Vecht for the last 18 years.
The Latin American market can be volatile, which provides opportunities for investors willing to take a longer-term view. BRLA’s managers seek quality companies with good growth prospects that are trading on sensible valuations. They have in-depth knowledge of the whole region, so are able to find interesting businesses outside the dominant economies of Brazil and Mexico.
Exhibit 1: Performance of Indices (Last Five Years, Rebased)
Source: LSEG Data & Analytics, Edison Investment Research
Why Consider BRLA?
Vecht and Fraser believe the upcoming presidential elections in Latin America could lead to a more robust political environment that may encourage investors to reconsider the region as part of their global portfolios. It is also somewhat insulated from global political tensions, maintaining a neutral stance and trading with both western and eastern nations.
Overall, Latin America offers above-average economic growth potential at a significant valuation discount to the world market. The managers suggest that over time around 60–70% of Latin American returns are due to bottom-up considerations and 30–40% are a result of top-down developments.
BRLA’s portfolio provides a diversified Latin American equity exposure, with the managers aiming to deliver an attractive total return from both capital growth and income. There is a clearly defined dividend policy, with regular distributions equivalent to 1.25% of quarter-end NAV. Having the flexibility to pay dividends out of capital as well as income ensures the managers are not forced into buying companies with high yields but unattractive growth prospects.
Stocks are selected on a bottom-up basis, so the trust’s sector weightings can be noticeably different from those of the MSCI Emerging Markets Latin America Index. At the end of July 2025, BRLA’s largest active positions were an overweight in consumer discretionary stocks (+9.6pp), which was more than offset by a below-index allocation to financial companies (-11.8pp).
NOT INTENDED FOR PERSONS OUTSIDE THE UK
BRLA: High-Conviction Opportunities in An Out-of-Favour Region
BRLA’s managers’ approach is to seek out opportunities that are not favoured by other investors, while avoiding areas of high interest. They can draw on the extensive resources of BlackRock’s London-based emerging markets team, which can provide both top-down and bottom-up analysis, to assist in the construction of a high-conviction portfolio of Latin American equities that is diversified by geography, sector and market cap.
Latin America has been overlooked by global investors, meaning that at the end of 2024 it only made up around 7% of the MSCI Emerging Markets Index, which was a 10pp decline over the prior decade. Nevertheless, the region has superior growth prospects compared with advanced economies, helped by favourable long-term trends including demographics, urbanisation and infrastructure spending.
Latin America remains attractively valued in both absolute and relative terms. At the end of August 2025, it was trading at a c 25% and c 50% forward P/E multiple discount to the MSCI Emerging Markets and the MSCI AC World indices respectively, while offering a higher dividend yield.
Exhibit 2: International Monetary Fund World Economic Outlook, April 2025
Source: International Monetary Fund, Edison Investment Research. Note: p is projected.
Exhibit 3: Valuation of MSCI Indices at 31 August 2025
Source: MSCI, Edison Investment Research
Perspectives from BRLA’s Lead Co-Manager
Vecht notes that Latin America is not all about Brazil and Mexico. However, as these two countries are by far the largest economies and constituents of the MSCI Emerging Markets Latin America Index, the smaller countries in the region are often overlooked by investors. The Latin American stock market can be very volatile, with recent years providing a good illustration. In 2023 the market rose by c 33% before falling by c 26% in 2024, and in the first eight months of 2025, the market had rallied by c 35%.
The manager explains that this volatility is partly politically driven, as in Latin American there is often a large divergence between political parties, so a change in a country’s leadership can lead to large share price movements. Over the next 12 to 18 months Vecht expects several developments in the region.
The Argentine president, Javier Milei, is exceeding prior expectations, but Brazil, Chile, Colombia and Peru are all countries where the incumbent leader is likely to be challenged; the polls suggest none of these leaders will be in place in 18 months. In Brazil, President Luiz Inácio Lula da Silva (known as Lula) is experiencing declining popularity as concerns mount around issues including corruption and rising food prices.
This is in contrast with Mexico, where President Claudia Sheinbaum is popular and the country’s leadership is unlikely to change. The manager believes that as well as reviewing the fiscal situation and currency when investing in a particular country, potential political changes should also be considered as they can be major market-moving events.
Moving on to specific economies, Vecht comments that Brazil is by far the largest economy (and stock market) in Latin America. Growth has exceeded expectations, but some share prices have fallen to their lowest level in 20–30 years. The managers remain very positive on the outlook for Brazil, which has one of the highest real interest rates in the world.
They expect an easier monetary policy in Brazil over the next 12 to 18 months as inflation is not out of control. Vecht reports that Brazilian companies are doing okay, while valuations are very attractive. The managers prefer domestic businesses including consumer-facing and financial companies, rather than exporters.
Stock prices are less volatile in Mexico than in Brazil, and Vecht expects there to be continued extensive trade between Mexico and the United States, which are two members of the United States-Mexico-Canada Agreement.
However, membership of this free trade agreement, which came into effect during US President Trump’s first term in office, does not protect Mexico from the imposition of US tariffs. Nevertheless, Mexico has a balanced fiscal position and company valuations are attractive. The manager believes that Brazil and Mexico offer more favourable investment opportunities than the Andean countries (Chile, Peru and Colombia).
While the Colombian government is trying to move away from the country’s economic dependence on oil and coal, there has been an upturn in gang warfare.
Current Portfolio Positioning
At the end of July 2025, BRLA’s top 10 holdings, across a range of sectors, made up 47.9% of the portfolio, which was a lower concentration compared with 52.9% a year before; four names were common to both periods. The managers are seeking incremental value by investing in multiple Vale, Petrobras and FEMSA share types, which are shown below.