Look at Latin American

04/11/2017 2:50 am EST

Focus: FUNDS

Robert Carlson

Editor, Retirement Watch

We entered Latin American markets as a way to profit from rising commodity prices after the bear market of 2011-2016, because most Latin American economies are commodity-based. In addition, the Latin American economies suffered from the effects of the European financial crisis, and I expected them to recover as Europe's economy stabilized.

Latin American stocks continue to provide positive returns to our portfolios through T. Rowe Price Latin America (PRLAX), though those stocks also are volatile. 

PRLAX had a strong 2016 but took a sharp slide after the election as fears of strong anti-trade measures caused investors to sell Latin American stocks. They've since more than recovered from that overreaction.

The fund looks for growing companies selling at reasonable prices. It is not a bargain hunter, but it is careful not to overpay for stocks. This is another long-term investor that prefers to own a relatively few stocks the fund's manager really likes. The annual turnover is 27%, compared to 81% for its competitors.

PRLAX recently owned 54 stocks and had 52% of the fund invested in the 10 largest positions in the portfolio. The fund also is concentrated in financial services (36% of the fund), consumer defensive (21%) and consumer cyclical (16%) companies.

Brazilian companies currently make up 61% of the fund. Other top country exposures are Mexico (17.1%), Peru (5.6%), Chile (4.7%) and Argentina (4.8%).

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