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Invesco Perpetual Latin American Fund

August 2014 (Content as at 31 July 2014)

Objective

The Invesco Perpetual Latin American Fund aims to achieve capital growth in Latin America. The fund intends to invest primarily in shares of companies in South and Central America (including Mexico) and the Caribbean, although it may include other Latin American related investments. In pursuing this objective, the fund managers may include investments that they consider appropriate which include transferable securities, money market instruments, warrants, collective investment schemes, deposits and other permitted investments and transactions as detailed in Appendix 2 of the most recent Prospectus.

Guide

Dilution adjustment explained

13 November 2013 |

What we mean by a dilution adjustment and what it means for you.

Find out more about dilution adjustments

Market commentary

A weakening macroeconomic environment in Latin America failed to dent investor confidence with the advance in equity markets being led by Brazil and Mexico. Economic data releases from Brazil were relatively disappointing, leading many analysts to downgrade the country’s 2014 GDP forecast. The central bank kept interest rates unchanged at 11% but indicated they may need to remain at this level to allow for inflation to converge to its target. Economic data from Mexico was more mixed, with consumer-related indicators continuing to improve amid stronger labour market conditions. However, the latest trade data showed deceleration in export activity. On the political front, the most important event in Mexico was the approval of the four packages of the Energy Secondary Laws sent to the Senate by the government. Weaker-than-expected economic data in Chile and Peru prompted both central banks to reduce interest rates from 4.25% to 3.75%.

Fund strategy

We believe that the equity markets in Latin America have become much broader and deeper over the long term. This is providing much improved opportunities for stock picking. Of the companies that we have held in the fund for a long time, particularly in Brazil but not exclusively, many of them are mid-cap, domestic growth-orientated stocks, trading at what we believe to be attractive valuations. They continue to deliver strong profitability and generate healthy cash flow. The fund’s largest country exposure remains Brazil, followed by Mexico. Our favoured sectors include real estate, transportation and media. There was limited fund activity during July with no new stocks added to the portfolio.

Key facts
Product type ICVC
Launch date 05 November 1994
Fund size £349.08m
Historic yield* 1.23%
IMA sector IMA Specialist Sector
Available in an ISA? Yes

Fund manager

Dean Newman

Title: Head of Emerging Market Equities

Team: Invesco Perpetual - Emerging Market Equities

Fund details
Fund currency GBP
Trading frequency Daily
Accounting period ends 28 February
31 August
Share types
SEDOL ISIN
Accumulation 3302770 GB0033027706
Income 3304828 GB0033048280
Accumulation (No Trail) B3RW8X8 GB00B3RW8X82
Income (No Trail) B3RW8Y9 GB00B3RW8Y99
Y (Acc) BJ04JG3 GB00BJ04JG36
Y (Inc) BJ04JH4 GB00BJ04JH43
Z (Acc) B8N44B3 GB00B8N44B34
Z (Inc) B8N44C4 GB00B8N44C41
Investment levels
Minimum lump sum £500
Minimum additional lump sum £100
Minimum monthly amount £20

One-off charges taken before you invest

Entry charge

The entry charge for the fund is up to 5%. This is the maximum that might be taken out of your money before it is invested. For example, if you invest £1,000, an entry charge of 5% means £950 of your money will be used to buy shares in the fund.

The entry charge covers the costs of setting up your investment.

If you invest through a third party (such as a financial adviser), but do not receive financial advice on your investment, this charge may include payments to that third party. For more details see "What share classes are available for your ICVC funds?".

Exit charge

There is no exit charge for the fund.

Charges taken from the fund over a year

Ongoing charge

The ongoing charge figure is based on a fixed, all-inclusive fee and excludes portfolio transaction costs. The ongoing charge for each share class can be found in the relevant Key Investor Information Document available under 'Related features and literature'. Investors will be provided with advance notice if any increases to this figure occur.

The ongoing charge covers all aspects of operating the fund during the year, including fees paid for investment management, administration and the independent oversight functions.

If you invest through a third party (such as a financial adviser), but do not receive financial advice on your investment, this charge may include payments to that third party. Once invested, your contract note or acknowledgement letter will show the amount of any payment in cash terms. For more details see "What share classes are available for your ICVC funds?".

Charges taken from the fund under specific conditions

Performance fee

No performance fee is charged.

Portfolio transaction costs1

On average, over the last three financial years, the fund incurred broker commissions of 0.15% and transfer taxes of 0.01%, as a necessary part of buying and selling the fund's underlying investments in order to achieve the investment objective. A proportion of these costs is recovered directly from investors joining and leaving the fund.

When the fund buys or sells shares, broker commissions and transfer taxes are paid by the fund on each transaction. In addition, there is a dealing spread between the buying and selling prices of the underlying investments. Unlike shares, other types of investments (such as bonds, money market instruments and derivatives) have no separately identifiable transaction costs; these costs form part of the dealing spread. Dealing spreads vary considerably depending on the transaction value and market sentiment. The estimated average dealing spread for the fund is 0.28% of the transaction value.

Comparing portfolio transaction costs for a range of funds may give a false impression of the relative costs of investing in them, for the following reasons:

  • Transaction costs do not necessarily reduce returns. The net impact of dealing is the combination of the effectiveness of the manager's investment decisions in improving returns and the associate costs of investment
  • Historic transaction costs are not an effective indicator of the future impact on performance
  • Transaction costs for buying and selling investments due to other investors joining or leaving the fund may be recovered from those investors. For further information see Pricing policy note below
  • Transaction costs vary from country to country
  • Transaction costs vary depending on the types of investment in which a fund invests
  • As the manager's investment decisions are not predictable, transaction costs are also not predictable

Stamp duty reserve tax (SDRT)1

SDRT is payable by funds which invest wholly or in part in UK equities.

During the last financial year the fund incurred stamp duty reserve tax of 0.00% as a result of investors joining and leaving the fund.

Schedule 19 SDRT was abolished on 30 March 2014 with the final payment being made in April 2014. We will continue to reflect SDRT as a charge to the fund (if applicable) where this payment occurs within the last financial year ending after 31 March 2014. Thereafter no charge will be shown.

Pricing policy note1

We operate a single pricing methodology for this fund and reserve the right to adjust the fund's price to protect your investment from the costs of buying and selling investments that result from other investors joining or leaving the fund. The amount of any such adjustment is calculated by reference to the estimated costs of dealing in the underlying investments, including any dealing spreads, broker commissions and transfer taxes.

Typical adjustments to the fund's price are to increase it by 0.30% for net inflows or decrease it by 0.35% for net outflows.

We usually adjust the price to the maximum extent possible when the value of net contributions or withdrawals is significant, which helps to protect your investment from the costs of the resultant transactions.

1The fund's financial year end is 31 August 2013. Figures in these sections are as at 31 August 2013.

Top 10 holdings (%)

Fund
Itau Unibanco 8.46
Vale 7.24
Petrobras 5.2
Ambev 2.93
America Movil 2.79
BRF-Brasil Foods 2.66
CIA Souza Cruz 2.61
Antofagasta 2.53
OGX 2.51
Telefonica Brasil 2.46

 

Breakdown by country of investment

Chart | Table

Region Fund
Brazil 70.60
Mexico 14.47
Chile 4.07
Colombia 2.69
Argentina 2.38
Panama 1.82
Peru 1.79
Canada 1.29
Guyana 0.65
Cash 0.23

Breakdown by sector

Chart | Table

Sector Fund
Financials 20.92
Materials 16.24
Energy 15.24
Consumer Staples 12.98
Consumer Discretionary 9.88
Industrials 9.56
Telecommunication Services 6.65
Health Care 3.49
Utilities 3.22
Information Technology 1.61
Cash 0.23

Investment risks

The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested. Past performance is not a guide to future returns.

As this is an emerging market fund, you should be prepared to accept a higher degree of risk than for a fund with a broader investment mandate as there is potential for a decrease in market liquidity, which may mean that it is not easy to buy or sell securities. There may also be operational difficulties.

The fund may use derivatives (complex instruments) in an attempt to reduce the overall risk of its investments, reduce the costs of investing or generate additional capital or income, although this may not be achieved. The use of such complex instruments may result in greater fluctuations of the value of the fund. The Manager, however, will ensure that the use of derivatives within the fund does not materially alter the overall risk profile of the fund.

Important information

Yield and performance figures are based on the accumulation share class.

All fund portfolio figures are as at date shown (source: Invesco Perpetual).

Fund performance figures are shown in sterling on a mid-to-mid basis, inclusive of net reinvested income and net of the ongoing charge and all other fund expenses to 31 July 2014. Benchmark performance figures are shown in sterling on a total return basis to the same date. The figures do not reflect the entry charge paid by individual investors. Graph figures are as at the end of the relevant month unless otherwise stated. Standardised past performance figures are as at 30 June 2014. (Source: Lipper).

The Historic Yield reflects distributions declared over the past twelve months as a percentage of the mid-market price of the fund, as at the date shown. It does not include any entry charge and investors may be subject to tax on their distributions.

Where Invesco Perpetual has expressed views and opinions, these may change. Where securities are mentioned they do not necessarily represent a specific portfolio holding and do not constitute a recommendation to purchase or sell.

For more information on our funds, please refer to the most up to date relevant fund and share class-specific Key Investor Information Documents, the Supplementary Information Document, the latest Annual or Interim Short Reports and the latest Prospectus. This information is available using the contact details shown.