Commodities Boost Latin America Fund

06/23/2016 10:00 am EST


Robert Carlson

Editor, Retirement Watch

The bottom in commodity prices is likely to help growth in emerging markets, especially in the Latin American economies, asserts Bob Carlson, editor of Retirement Watch.

Production is being reduced while demand is holding firm and is likely to increase. In my view, the commodities markets likely reached their lows.

One way to benefit from this forecast is to own stocks of companies based in Latin American countries. These economies tend to be commodity-based.

They rise and fall with commodity prices, and the companies in them tend to do the same, regardless of the businesses they are in. They suffered the last few years as commodity prices crashed and should do well as commodities recover.

I recommend the T. Rowe Price fund, Price Latin America (PRLAX). It was investing in the region long before other US fund companies.

About 51% of the fund is invested in Brazil, 28% in Mexico and 5% each in Chile and Peru.

The fund recently was invested about 34% in financial services, 24% in consumer defensive and 16% in consumer cyclical companies.

The fund invests primarily based on the merits of individual companies using T. Rowe Price’s approach of looking for companies with excellent growth prospects selling at reasonable prices.

It doesn’t devote much effort to political or economic forecasting of the different countries when allocating its portfolio.

The fund tends to be a concentrated, long-term investor, holding only 48 stocks recently with an annual turnover percentage of 23%.

The fund is down 1.97% in the last four weeks but up 22.55% for the year to date. It still is down 6.84% for the last 12 months and an annualized 10.32% for the last three years.

The fund has a $2,500 minimum investment and is available through most discount brokers and many NTF, or no transaction fee, programs.

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By Bob Carlson, Editor of Retirement Watch.

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