Nearly two years ago Renta 4 Luxembourg launched a new fund that is truly unique in Europe – the Renta 4 MILA fund. What is MILA? MILA is the Pacific Alliance stock market, which was founded in 2011 and comprises Chile, Colombia, Peru and Mexico; an alliance with the motto ‘Four countries, one market’. With a market capitalisation of $800bn, the MILA is the world’s fifth largest market, even larger than the Bovespa, which has a value of $718bn.
Investing in Latin America is usually associated with instability, high risk and volatility. However, these assumptions come from a lack of knowledge and not from fundamental analysis (Ebitda, Ebit, cash flows, net debt).
Renta 4 Luxembourg invests in the MILA market, participating in the consolidation of a strong commercial, political and social alliance between a group of emerging markets. It means investing in countries that have the largest economic growth, which also are the most commercially developed and have free circulation of goods, services, capital and people. This is a market with enormous potential.
Only three pieces of macroeconomic data are needed from the World Bank to recognise the importance and huge potential of this market: The MILA market has an unemployment rate of 6.4% vs the rate of 6.5% in OECD countries; between 2005−2016 it enjoyed an average inflation rate of 3.8% vs 2% in OECD countries and a real GDP growth rate of 2.7% vs 1.11% in the OECD.
A key feature of the MILA market is the rigour and political independence of the domestic monetary authorities. This is recognised as economically healthy, and is rated highly by global agencies. Indeed, almost all of the countries within the MILA market have higher credit ratings than European countries.
Over recent years, we have seen several political changes in the region, which have provided us great peace and stability for the future. This includes the leadership of Pedro Pablo Kuczynski in Peru, Mauricio Macri in Argentina, Sebastian Piñeira in Chile, as well as the Colombian Peace Process and the end of the FARC movement.
Renta 4 Banco in Latin America
Renta 4 Banco has a presence in Chile, Colombia and Peru and is a key player in the region’s market. Renta 4 Banco is monitored by the local regulators, with the guidance of a local advisor to the region, which enables us to have a better in situ understanding of the markets and to be more agile in managing them. Our experience and knowledge in the local markets has provided us with the confidence of more than 500,000 clients.
It is because of this, in accordance with a prudent policy, that Renta 4 should entrust and diversify savings into these economies – Renta 4 MILA Investment Fund is the best option to do so. The objective of the fund is to maximise profitability with minimal volatility, achieving +5.21% YTD in dollars and a volatility of 10.52%, as of the 30 September 2017.