Bourse Securities' Brazilian Latin Fund reflects Brazil's increasing clout as a growing international financial market, said Subhas Ramkhelawan, managing director, Bourse Securities Ltd. "This is an exciting investment because Brazil is seen as one of the driving forces of the Latin American continent. Brazil is a driving force and one of the BRICS, and it is one of the seventh or eighth largest economies in the world," he said.
Ramkhelawan spoke to the Business Guardian last Thursday at his office, Maraval Road, Queen's Park Savannah, Port-of-Spain.
The Bourse Brazil Latin Fund is a US-dollar denominated mutual fund that offers the investor the opportunity to participate in the Brazilian and Latin American markets at a time where there are few investment options locally and regionally.
The fund, the first of its kind in the region, in that it's a balanced portfolio of assets including bonds, equities, exchange traded fund (ETFs) and alternative investments, invested in local and US dollar currencies.
The fund is close ended exchange traded mutual fund and units will be issued up to a maximum of 5,000,000 units and will be a period of five years, after which provisions have been made to convert the fund to an open ended one.
While the fund is close ended, prior to the fifth anniversary, unit holders can apply to have income distribution reinvested in additional units of the fund on the T&T Stock Exchange at the relevant market price and following conversion to an open ended mutual fund, income distribution will automatically be reinvested in additional units.
Brazil's capital market
Ramkhelawan said Brazil's macroeconomic indicators are much more balanced than those of the US and the Eurozone, making it ideal for investments.
"Brazils' economy has averaged growth in excess of 3.8 per cent over the last five years. It has fantastic macroeconomic credentials. While Brazil has been growing at 3.8 per cent, others have been growing at well below two per cent and Europe has been stagnant, if not heading south. While the US recovery is somewhat incipient, the structural problems are still there and the high debt of that country," he said.
The United States' debt to gross domestic product (GDP) is much lower than Europe's.
"Brazil's debt to GDP is at 35 per cent and is projected to go down to 30 per cent. There is the capability in Latin America and Brazil to accelerate growth through borrowing, which will not imbalance those economies."
He said despite cultural differences and a traditional lack of knowledge of that region, Bourse will help facilitate prospective investors' entry into the market.
"We provide the facilitation to take you into that investment arena very easily because of our know how and our access, first in terms of our research, second in terms of the institution so it makes it an easy platform for investors who have an interest to get the information and advice they need and then the execution that is needed to get into the various areas," he said.
Ramkhelawan promises to bridge the gap between local investors and the emerging markets like Brazil.
"The traditional investment arenas of Europe and the US do not show the kinds of signs of pickup and the potential for market return as these economies of the south are showing. We want to build that bridge between the investor and excellent investment destinations," he said.
He spoke about the 2014 World Cup games to be hosted by Brazil and then the 2016 Olympic Games, which will not only add prestige to that country, but open new investment opportunities.
"With all the infrastructure investments, the economy will be boosted. Then there will be a boost for market activity."
Accessible fund
He said the fund is open to various classes of investors.
"The minimum investment is US$2,000, so it is accessible to any reasonable retail investor. It is not as if we are limiting this to the institutional players. It is retail, high net worth and high affluent. That is the beauty of the fund, we do not lock anyone out," he said.
Ramkhelawan said the fund is an investment avenue for people like the Clico policyholders that would have received their settlements.
"We crafted the fund to meet a need. There were a number of investors who would have invested in Clico, they received their settlements. You have so much liquidity in the system and there is little investment avenues. We need to expand investment avenues in US dollars. Gone are the days where a suitcase trader can come and sell US dollars on the markets. They now have to be registered and approved by the T&T Securities Exchange Commission," he said.
Ramkhelawan said this latest fund by Bourse is simply an addition to other funds in its portfolio.
"This is just another addition to our other funds that already exist, the Savinvest India Asia Fund, Savinvest US Dollar Income Fund, Savinvest TT Dollar Income Fund, the Savinvest TT Dollar Capital Growth Fund and the Savinvest US Dollar Capital Fund. Investors are looking for a place to invest US dollars," he said.
T&T economy
Speaking on the local economy, Ramkhelawan said it is important for T&T to discover new oil and gas reserves.
At the moment, he said, T&T still has not diversified its economy away from these resources, so it's vulnerable to price changes on the international commodity markets.
"So there is this structural problem we have to face with the economy," he said.
He said the economy has been "muted" and has now grown in the last five years.
"In a world that is volatile, there could always be a downside in terms of prices. Over the last two weeks, you have seen commodities, like gold, take a hit. In the short term, the economy will bob along, in the long term, oil and gas exploration needs to ratched up and that next growth spurt could be six or seven years way."
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