The top-four funds in terms of total returns in the entire IMA universe are focused not on China or other Asian markets, or even smaller companies, but on Latin America.
Niche funds from Invesco Perpetual, JP Morgan, Scottish Widows and Threadneedle have topped the charts over the last decade.
The Baring Latin America fund rounds up the list – although Aberdeen Emerging Markets and Old Mutual Dublin UK Select Smaller Companies have outperformed it over 10 years.
Performance of Latin American funds over 10 yrs
| Name | 10 yrs (%) |
|---|---|
| Invesco Perpetual Latin America | 889.17 |
| JPM Latin America Equity | 758.64 |
| Scottish Widows Latin American | 694.58 |
| Threadneedle Latin American | 672.12 |
| Baring Latin America | 573.27 |
Source: FE Analytics
It is worth bearing in mind the many risks involved when investing in such a niche region of the world, however. The portfolios each have an annualised volatility score of around 25 per cent over the 10 years.
While all of the portfolios have surged ahead in rallies, they all lost a significant amount in the falling markets of 2008 and 2011.
For investors with a long-term outlook, however, the rewards on offer could make the risk worthwhile.
Invesco Perpetual Latin America
This four crown-rated fund is the best-performing portfolio in the entire IMA universe over 10 years, returning 889.17 per cent. This means that £1,000 invested in the fund a decade ago would be worth £9,891.71 today.
Performance of fund vs index over 10 yrs
Source: FE Analytics
The £484.7m fund did lag the index in 2007 and shed 40 per cent in 2008. It recovered in 2010, before losing nearly 20 per cent again in 2011.
It was well ahead of the MSCI EM Latin America index in 2012 and has continued its strong run this year.
It offers a small yield of 1.15 per cent.
The fund requires a minimum investment of £500 and has a total expense ratio (TER) of 1.73 per cent.
JPM Latin America Equity
The $1.6bn, four crown-rated JPM Latin America Equity fund has been one of the dominant portfolios over the last 10 years.
It has been headed up by Latin America expert manager Luis Carrillo for the last decade. Deputy manager Sophie Bosch joined the fund in November last year.
In the 10 years since Carrillo took over the fund, it has made 758.64 per cent, just underperforming the MSCI EM Latin America index over the period.
Performance of fund vs index over 10 yrs
Source: FE Analytics
A £1,000 investment in the Luxembourg-domiciled fund 10 years ago would now be worth £8,586.42.
The majority of the portfolio is invested in financials, which had a strong year in 2012, followed by consumer products and industrials.
Brazilian banks Itau Unibanco and Banco Bradesco and Peruvian bank Credicorp feature in the fund's top-10 holdings.
The fund requires a minimum initial investment of $35,000 and carries a TER of 1.9 per cent.
Scottish Widows Latin American
The tiny £25.7m Scottish Widows Latin American fund is the third best-performing IMA portfolio over 10 years, according to FE Analytics.
The fund has made 694.58 per cent in this time, putting it well ahead of the majority of open-ended funds but behind the MSCI Emerging Latin America index.
Performance of fund vs index over 10 years
Source: FE Analytics
The portfolio, managed by Iain Fulton, has the highest yield of any on this list, at 1.6 per cent.
Similar to the Invesco portfolio, the Scottish Widows fund is tipped towards basic materials stocks, with metals and mining corporation Vale SA its number-one holding.
The fund has a TER of 1.56 per cent and requires a minimum investment of £1,000.
Threadneedle Latin American
Daniel Isidori’s £855.9m, four crown-rated Threadneedle Latin American fund is the fourth-best performing fund in the IMA universe over the last 10 years.
It has made 672.12 per cent, which is less than its MSCI EM Latin America 10/40 index over the period.
Performance of fund vs index over 10yrs
Source: FE Analytics
The portfolio is also tipped towards basic materials, with 35 per cent allocated to the sector.
It has the same number-one holding as Scottish Widows Latin American and also holds financials Itau Unibanco, Banco Bradesco and Credicorp in its top-10.
The fund requires a minimum investment of £2,000 and has a TER of 1.74 per cent.
Baring Latin America
While the Baring portfolio has underperformed Aberdeen Emerging Markets and Old Mutual’s Dublin-domiciled smaller companies offering over 10 years, it still delivered strong returns.
The $621.8m fund has made 573.27 per cent over the last decade, below its benchmark.
Performance of fund vs index over 10yrs
Source: FE Analytics
It is also tipped towards basic materials and financials – holding the same three banks that feature in many of the other top-10 holdings on this list, as well as miner Vale SA and US supermarket chain Wal-Mart’s Mexican subsidiary.
The fund requires a minimum investment of $5,000 and has a total expense ratio of 1.8 per cent.