Consumer credit is one to watch in Latin America

Mr Landers, Latin American investment trust manager at the group, said domestic consumption was a more important driver of returns in Latin America than in other emerging markets, meaning consumer credit would play an important role.

He said: "The domestic side is what you can buy and forget about for the next 5-10 years. There are all kinds of pent-up demand.

"Growth in income had been kept down by inflation, but you're starting to see the financial and economic implications of a lower inflation rate."

He said the region was several years away from needing securitisation or other methods to package consumer loans and sell them on to buyers such as pension funds.

But this could become an attractive alternative if government bonds in the region start to yield too little and pension funds need to look elsewhere for returns, he said.

Concern has risen about the type of credit required to encourage emerging markets to stimulate their domestic economies and become less dependent on exports.

China in particular ordered a massive credit-fuelled stimulus package this year, which some observers fear could taint the country's banking system, which so far this decade has been one of the most successful of the major economies.

Increased consumer lending could result in a higher default rate or the more sophisticated packaging that helped precipitate the western financial crisis of the last two years.

But Mr Landers said returns were currently high enough to cover defaults.

Mortgage penetration is also many times lower than in the US or the UK, making it less important for Latin American banks to securitise and sell on their loan books.

According to Mr Landers, the region's largest economy, Brazil, was embarking on a scheme to encourage lower-income households to use mortgages, following the success of a similar scheme in Mexico.

"You're not seeing 100 per cent loan-to-value deals," he said. "Payments come out of the workers' pay cheques. The mortgages are plain vanilla."

Despite lacking a central credit bureau, the manager pointed out Brazilian banks were doing joint ventures with retailers to enable them to lend to a wider base of consumers.

Peru had a similar long-term consumer story, he said. He cited Credit Corp, the largest domestic consumer lender, as an attractive way of playing the story.

By comparison, Mr Landers said he had a low weighting in defensives in the region because such growth stories were the main reason clients invested in it.