Latin American funds stage stealth rally

By Doug Watt | March 12, 2004 | Last updated on March 12, 2004
2 min read

(March 12, 2004) Natural resource and Latin American equity mutual funds were February’s top performers in a month which saw the vast majority of funds gain ground, according to Morningstar Canada’s monthly report.

“Broad-based strength in global equity markets drove approximately 96% of funds into positive territory last month, building on January’s gains,” says Morningstar analyst David O’Leary.

The natural resources fund index climbed 5.6% in February, fuelled by higher oil and gas prices. The Latin American equity fund index finished a close second, gaining 5.5%, the fourth straight month that this category has finished in the top five, Morningstar says.

“While regions such as China and India continue to grab headlines, Latin American funds have quietly amassed an 11% gain year-to-date, after a 30% surge in 2003,” O’Leary notes.

“Ironically, Latin America’s strong performance comes at a time when the category has almost disappeared,” he adds. “There are now only nine Latin funds, which includes five different versions of one portfolio (Investors Latin American Growth). Over the past two years, six funds have either been terminated or merged into funds with broader geographic mandates.”

The Latin American category is currently Morningstar’s smallest by assets, worth just $116 million, reflecting negative investor sentiment and lack of sales after three consecutive years of poor performance. O’Leary says the recent recovery in returns has been driven largely by economic reforms and more responsible monetary policy in key countries, including Brazil.

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  • Canadian small cap equity funds also performed well last month, while U.S. and Canadian equity funds posted low single-digit returns, reflecting the performance of their underlying indexes.

    At the bottom of Morningstar’s February chart were science and technology funds, along with U.S. and Canadian money market funds.

    Mutual fund sales were also strong in February, with IFIC estimating net sales of around $5 billion. IFIC’s final figures will be released on Monday.

    Filed by Doug Watt,,


    Doug Watt