Flash Alert:?Milltrust Latin America Fund was recently awarded?five stars?by Morningstar ratings

Regional Macro Highlights:?

  • Earnings recession in Latam close to the bottom, expect modest growth recovery for the region
  • Oil Price Collapse is Changing the Investment Landscape in Latam
  • Fiscal adjustment is underway in Brazil and policy volatility largely behind us
  • Brazil bond spreads and FX are improving
  • Inflation in Brazil will be high in 2015, due to adjustments in relative prices, but long-term expectations have improved since the arrival of the new Finance Team.
  • Mexican government has made some significant achievements and reforms (Telecom, Financial, Fiscal, Labour, Education and Energy)
  • Mexico?s Manufacturing Economy is Only Getting Stronger.
  • Crisis of confidence in Chile continues, but sentiment is improving
  • Peru: confidence and sentiment not in optimal shape but expect stimulus upside in 2H15
  • Colombia infrastructure plans set to offset the country’s oil impact.
  • Argentina elections

Investment Strategy:

Mexico

  • Increase exposure to consumer stocks, taking advantage of intra-quarter volatility and given evidence of cyclical recovery.
  • Increase exposure to banks, given evidence of cyclical recovery.
  • Increase underweight in Telecom space given rising regulatory concerns.
  • Increase exposure to beneficiaries of a weaker FX.
  • Increase our position in real estate.
  • Reshuffle our positions in industrials.

Brazil

  • Rotate to interest rate sensitive stocks less exposed to consumer spending
  • Maintain overweight in private banks
  • Maintain underweight to direct consumer related plays
  • Reduce underweight in Utilities and Moving Industrials to Neutral
  • Maintain overweight selected exporters/beneficiary of weaker FX Maintain overweight on infrastructure plays

Andean Region

  • Reduce to neutral in Peru given concerns on execution and investment in an election year
  • Maintain underweight in Chile given valuations level with limited growth visibility
  • Contrarian overweight Colombia via infra and USD exposed names
  • Maintain overweight Argentina on the expectations of political change