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JP Morgan Asset Management To Launch Brazilian Investment Trust

Knud Noelle, 2 March 2010

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To take advantage of predicted growth in Brazil due to, for example, the 2014 Football World Cup and the 2016 Olympics, JP Morgan Asset Management said it intends to launch an investment trust focused on the Latin American country.

The JP Morgan Brazil Investment Trust will enable investors to access companies exposed to the domestic economy through a London-listed investment trust, the firm said in a press statement yesterday.

As reported elsewhere by this publication today, another investment firm, Bedrock, is launching a fund of funds business that is focused on harnessing the growth of Brazil, one of the "Bric" emerging market powerhouses.

Brazil’s economy, the tenth largest economy in the world, is largely driven by consumption, which accounts for over 60 per cent of Brazil’s $1.5 trillion GDP.

The BRIC nation is widely tipped as the growth story of 2010 but historically investment in Brazil has been lower than in other emerging markets, the statement continued.

“Brazil is a very exciting investment opportunity and since it achieved investment grade in April 2008 it has transformed from inflationary boom-bust cycles. 2009 stress-tested this when the country experienced a normal recession with a swift recovery,” said Sebastian Luparia , manager of the JP Morgan Brazil Investment Trust.

“The investment opportunities we are finding in the region are focused on the domestic growth of the economy and we are selecting opportunities with a two to three year investment horizon so as to capitalise on investing in this growth.”

The firm believes the more stable business cycle and lower interest rates experienced recently will significantly encourage domestic investment supported by the 2014 World Cup and 2016 Olympics. This will result in a combination of increased productivity and growth.

Brazil has recently shown its ability to recover from international financial turbulence and is now able to pursue counter-cyclical polices which put it in a stronger position than other highly cyclical emerging markets, JPMAM said.

Using a bottom-up stock selection strategy, the investment managers, Mr Luparia and Luis Carrillo, will focus on investing in stocks that capitalise on Brazil’s rising public and private sector investments which are driving economic growth.

David Barron, head of Investment Trusts at JPMAM, said: “We think Brazil offers some compelling opportunities for investors with a higher risk tolerance.”

JPMAM already manages country investment trusts for the three other BRIC nations, Russia, India and China.

In other news related to the firm and its Brazilian involvement, Bloomberg reported that JP Morgan is in talks to buy a minority stake in the Brazilian fund manager Gavea Investimentos. At time of publication, WealthBriefing was not able to confirm this report.

The JPMorgan Brazil Investment Trust will have a target size of £50 million ($75.8 million) and will predominantly target private investors and advisors. The portfolio would aim to have 25 to 50 holdings and there would be no hedging of currency exposure and the portfolio will diverge substantially from the benchmark constituents. The Company will measure its performance against the MSCI Brazil 10/40 Index.

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