JPM Latin America Equity D (acc) USD

Analyst Report
Morningstar's Take

by Michael Born
JPM Latin American remains an attractive offering in the sector, with a highly experienced specialist manager, a well-resourced analyst team, and a structured investment process. With solid execution since inception, we maintain People and Process Pillars at Above Average.

Luis Carrillo has been the lead here since 2003 and brings 25 years of experience at JPM as a Latin America specialist. Carrillo is supported by Rachel Rodrigues, who brings 10 years of experience, and eight analysts focused specifically on Latin American equities, combining for one of the larger teams in the category. The team stability, with this team having analysts with an average tenure of 11 years at JPM, and Luis' expertise regarding the region, are key drivers of our conviction.

The process is well-defined and is used across JPM's Emerging Markets and Asia Pacific strategies. It divides stocks into buckets based on an assessment of their perceived quality. They then invest across the buckets, looking for sustainable returns on capital, long duration competitive advantages, and reasonable valuations relative to these factors. As a result, they take a longer-term approach as compared with their peers. In addition, we see a structural underweighting to commodity-related names, in a region that has a sizable bias to resource-intensive businesses.

The last few years have been a value-oriented market, with cyclicals and commodity names in particular driving the market. In this environment, it is not surprising to see the fund underperforming the MSCI EM Latin American Index. The clean C share class was underwater by 2.8 percentage points over 2022 and by 0.4 percentage points over 2023. However, we have seen handsome outperformance of the Latin America Equity Morningstar Category average over both of these years. The aforementioned low weighting to value names was the major performance driver, although they have had some single-stock underperformers, such as Brazilian retailers Lojas Renner and Magazine Luiza and some of their ecommerce and technology names over 2022. As a result, performance remains very much in line with our expectations and, on a five-year basis performance, is ahead of both peers and the benchmark, well into the top decile of the peer group.

Morningstar Medalist Rating™Quality-focused Latin America exposure with an experienced manager at the helm.
To find out how Morningstar rates a fund click here.
Morningstar Pillars
PeopleAbove Average
ParentAbove Average
ProcessAbove Average
Morningstar Medalist RatingMorningstar assigns the Medalist Rating to funds that are qualitatively and quantitatively assessed through manager research and algorithmic processes. The assessment turns on three key “pillars” – People, Process, and Parent – that yield an estimate of how well a fund will perform before fees but after adjusting for risk.
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