The DWS Invest Latin American Equities LC fund is a Luxembourg-domiciled fund, which invests primarily in equities issued by companies domiciled in Latin America or issuers domiciled abroad but whose principal business activity is in Latin America.
Given the nature of the asset class – Latin American equity – this fund is ideal for the risk-tolerant investor as the strategy seeks to invest in assets that offer specific opportunities to maximize returns and often tolerate fluctuations in the values of those assets.
It is a DWS fund that has more than 11 years of history (launched in 2012) and whose portfolio manager is a team of Itaú USA AM Inc. domiciled in the United States and led by Scott Piper, who is the Investment Manager of the firm and who is the Portfolio Manager of the fund since 2020 since the collaboration agreement between Itaú and DWS.
At the close of January 2023, this strategy had over EUR 870 million in assets under management and its benchmark is the MSCI EM Latin America 10/40 Net TR in EUR and is denominated in EUR.
Performance of the DWS Invest Latin American Equities LC fund
Cumulative performance (in %) – share class FC (EUR)
| 1m | 1y | 3y | 5y | s. Inception | YTD | 3 y avg | 5 y avg | 2019 | 2020 | 2021 | 2023 | |
| EUR | 4.5 | 12.2 | 11.3 | 50.3 | 79.8 | 4.5 | 3.6 | 8.5 | 38.1 | -10.3 | 1.2 | 17.6 |
| BM IN EUR | 8.0 | 14.9 | 2.9 | 6.0 | 9.7 | 8.0 | 0.9 | 1.2 | 20.0 | -21.1 | -0.5 | 17.0 |
Source: Factsheet DWS Invest Latin American Equities Fund, EUR as of January 31, 2023.
The DWS Latin American Equities fund is a classic in relation to mutual funds dedicated to Latam, it has a long history and an enviable track record, and many times it puts its competitors off in relation to the fact that they do not know how the team that manages it achieves such an impeccable, outstanding and consistent performance.
As you can see above, looking at the 3-year and 5-year returns, which are the measures considered by institutional investors (because they give an indicator of consistency rather than just a snapshot of the last year), you can see that DWS destroys its benchmark.
Source: Factsheet DWS Invest Latin American Equities Fund, EUR as of January 31, 2023.
In reviewing the risk indicators in the table above, the first thing to note is that the 3-year alpha is positive and significant, which means that it adds value over the market beta (benchmark).
The second important thing is that the Information Ratio, which is alpha over the tracking error, basically as it uses the deviation from the benchmark, is positive, which means that the team is right to have bets and not be indexed to the benchmark.
The Beta of less than 1 indicates that it is a fund that does not have all the sails set to sail but keeps some risk, which is not unimportant when looking at its impeccable excess return over the benchmark, which tells us that the team does add return by stock selection.
Other indicators for DWS Latin American Fund
Source: Factsheet DWS Invest Latin American Equities Fund, EUR as of January 31, 2023.
On the right, you can see that it is a large-cap equity fund, a Large Cap, which is good in times when liquidity suffers, as it does not get buried in companies with low liquidity to trade. With 52% exposure to Real and 47 stocks in the fund, it is a high-conviction fund.
Source: Factsheet DWS Invest Latin American Equities Fund, EUR as of January 31, 2023.
It is a fund that strongly weighs financials, consumers, industrials, and materials, which makes it a blend (neither value nor growth), better yet, it does not have an ex-ante bias to a sector, but focuses on companies.
Positioning of Chilean Pension Funds in the Fund
Source: LVA Fundmate Analysis https://fundmate.app/ as of January 31, 2023.
The investment teams of the Chilean pension funds have analysts dedicated exclusively to selecting the best mutual funds to invest in the world, and for their investments in Latin America, they use DWS among other funds, as shown in the graph generated by LVA’s FundMate pension fund investment analysis software. The Chilean AFPs have been increasing their position in the fund month by month, and until today they have more than 700 MM EUR invested in it.
Conclusions
| Advantages | Disadvantages |
| -Positive Information Ratio -Solid History and Track Record -Backing House -Institutional Background | -Beta less than 1 may lag if there is a rally of the asset class across the board. |
The DWS Latin America Equity fund is a fund with a history, backed by DWS and with a strong institutional investor that is heavily invested, who must have done a tremendous amount of due diligence and monitoring, which gives it tremendous support.
