Isidori goes high conviction on Threadneedle Lat Am fund
Mr Isidori replace Jeremy Podger on the £909m fund in September. He has now cut the number of stocks in the portfolio from 49 to 41 and boosted its focus on the more economically sensitive consumer discretionary, materials and energy sectors.
Stocks the manager has increased his weighting in include Brazilian mining giant Vale, Chilean miner Antofagasta, Brazilian steel producer Gerdau and Brazilian state-run energy giant Petrobras.
He has also added new positions in consumer stocks Hering, which he said was one of his “favourite stocks”, Mexican beverage giant Femsa and Brazil Foods. These trades have boosted the consumer discretionary to the manager’s second-largest overweight position relative to the benchmark index.
Elsewhere, he has sold a series of stocks completely, including pulp and paper companies Fibria and Suzano and industrial holding WEG.
Mr Isidori said the higher-conviction approach was more appropriate, given his bullish outlook for the Latin American consumption story.
He said experts were predicting salary rises of 14 per cent in Brazil in 2012 alone.
“Brazil has a target of 4.5 per cent in terms of inflation, plus or minus 2 percentage points, but I was in Brazil in December and while there is still formally a target they are emphasising growth over inflation,” he said.
“Brazil has grown very quickly, and no government wants to be the one which stops that, meaning this current government will do anything and everything just to keep growth going.”
Mr Isidori said he expected the Brazilian economy to grow by roughly 3.3 per cent in 2012 and that he expected to see a renewed appetite for risk from investors.
The manager’s Brazil weighting is now 65 per cent.
“This year there is a trend of “risk on”, and month-to-date Brazil has returned 14.6 per cent in dollar terms,” he said.
“Brazil will definitely be a benefactor of a risk-on mentality, but I am being cautious. All the stocks I have bought recently are highly-liquid, large companies.”
Elsewhere, financials is the fund’s largest sector overweight sector at 6 percentage points. Mr Isidori said he had actually reduced this position since he took over the fund, by selling Banco Santander Brazil.