New for 2017. Taking an economic and sector-based approach to find winners
Latin America is a land rich in natural resources with much growth potential. Although the region has suffered severe setbacks in recent years, recovering demand for commodities and the election of several pro-market, reforming governments in the region bode well for its future.
The manager of Neptune Latin America is Thomas Smith, who uses the company's in-house research to select stocks and industry sectors he believes will benefit from the region's growth and worldwide demand for the commodities it produces, although in recent times the fund's main exposure has been to the financial sector. Smith is also responsible for the global oil and gas sector at Neptune.
Neptune's investment approach is to seek to exploit share price inefficiencies resulting from interpretational differences in markets. What it calls its 'real world' research focuses on issues where interpretational differences - for example, on oil prices or currencies, industry disruption, macroeconomics and company strategies - are particularly large.
Smith explains that the first layer of his investment process comes from the group's in-house economics team, which provides country reviews that examine economic conditions and the social, political and capital market situation.
This macroeconomic overlay is combined with in-house research to determine the prospects for different industries globally, which is presented to investment teams at regular meetings. This approach helps Smith to identify companies in his markets that he believes can benefit from change. The fund's main geographical exposures recently have been to Brazil and Mexico.