An investment trust focused on investment in Brazil will be launched by J.P. Morgan Asset Management (JPMAM), the largest manager of investment trusts in the UK
JPMAM says the launch means investors will be able to access companies exposed to the domestic economy through a London-listed investment trust and harness the country's rapidly rising domestic economic growth.
Brazil is part of the BRIC bloc (an acronym on Brazil, Russia, India & China) and is widely tipped as the growth story of 2010 but, historically, investment in Brazil has been lower than in other emerging markets.
Brazil is the tenth largest economy in the World with an economy driven by consumption, which accounts for over 60 per cent of Brazil's USD 1.5 trillion GDP.
J.P. Morgan Asset Management 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.
The launch of the trust comes as JPMAM feels Brazil has passed the ultimate “stress test” of the global slowdown and proved its ability to recover from turbulence both domestic and global.
The country is now enjoying the ability to pursue counter cyclical polices which puts it in a stronger position than other highly cyclical emerging markets.
JPMorgan Brazil Investment Trust will employ a bottom up stock selection strategy; the investment managers, Sebastian Luparia and Luis Carrillo, will focus on investing in stocks that capitalise on Brazil's rising public and private sector investments that are driving economic growth.
"Brazil is a very exciting investment opportunity and since it achieved investment grade in April 2008 it has transformed from inflationary boom-bust cycles,” said Sebastian Luparia, manager of the JPMorgan Brazil Investment Trust.
“2009 stress tested this when the country experienced a normal recession with a swift recovery. 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 JPMorgan Brazil Investment Trust will have a target size of £50 million and will predominantly target private investors and advisers.
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.
In addition to subscribing to ordinary shares at launch the investment trust will also offer investors a bonus issue of subscription shares, on a one for five basis.
Investors can register at www.jpmbrazil.co.uk to receive further information when available.
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