A revival in shares of BlackRock Latin American Investment Trust (BRLA) could mark the start of an eventual recovery to the 760p levels seen in late 2010.

Though the trust has disappointed with negative ten-year annualised share price and net asset value (NAV) returns, according to Morningstar, a 7.6% NAV discount and a 4.3% yield on the quarterly dividend paying trust is a great way to gain exposure to a vast region with deep value attractions.

A step-up in performance or increased investor appetite for Latin American equities would help to narrow the discount.

Latin America and largest economy Brazil have been hard hit by the pandemic, yet the region offers scope for considerable long-term upside as its economies grow and develop. Home to around 650 million people spanning countries as diverse as Brazil, Mexico, Chile, Argentina, Peru and Colombia, Latin America is too big to ignore.

US dollar weakness has also historically been very supportive for Latin American equities and an end to the pandemic should drive a sharp earnings rebound in 2021 and beyond. Covid-19 has accelerated a trend of low interest rates and digitalisation in Latin America, while robust Chinese demand for commodities should power Brazilian economic growth going forwards.

A savvy way to play the regional recovery, BlackRock Latin American aims to generate long-term capital growth and an attractive total return from a diversified portfolio of companies listed in, or with main operations in, Latin America.

Since their late 2018 appointment, co-managers Ed Kuczma and Sam Vecht have concentrated the portfolio and employed gearing more tactically. They seek reasonably valued companies that have good long-term earnings growth and cash flow generation, robust balance sheets and well-regarded management teams. They also assess the environmental, social and governance (ESG) credentials of every company they invest in.

As at 30 November 2020, the biggest investments included the Brazilian quartet of Petrobras, iron ore producer Vale, financial services company B3 and lender Banco Bradesco.

Investors are also buying exposure to the likes of America Movil, the Mexican telecommunications giant controlled by tycoon Carlos Slim, Mexican cement producer Cemex, food retailer Walmart de Mexico and Chilean lithium producer Química y Minera.

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