Bradesco Asset Management (BRAM) has teamed up with FTSE Group to launch a Latin American equities fund that will track a newly-developed equity index consisting of high-quality names from across the region.
The SICAV fund and index are built on specific “smart” beta principles, which focus on “factors” including low volatility, quality and relative valuation. The innovative fund and index are designed to provide European and Latin American investors diversified exposure to Latin America equities with an orientation to specific factor characteristics that have historically been rewarded.
For FTSE, its first Latin America factor index is focused on offering investors diversified and efficient factor exposure by applying a novel methodology to modify index constituent weightings. Typically, indices are weighted by free-float market capitalisation. The new index and fund broaden the range of strategies available to invest in Latin America.
“We are always looking at ways of innovating, increasing the geographic range of our products and bringing meaningful opportunities to our clients across Europe and Latin America,” says Joaquim Levy, CEO for Bradesco Asset Management.
The rule-based investment approach to the fund means that investors will enjoy full transparency from the fund, known as Bradesco Global Funds – FTSE Latin America Quality Value Equity. The fund will add value through systematically exploring quality stocks from companies in Brazil, Chile, Colombia, Mexico and Peru that have reasonable valuations. “We believe that funds, which are based on clear rules that focus on key systematic characteristics, represent one of the best ways for clients to have efficient exposure to equities, providing expected excess returns over conventional capitalisation based indices, and implying lower risk in the long term,” says Axel Simonsen, who heads up Systematic Products at BRAM.
Peter Gunthorp, FTSE Managing Director of Research and Analytics, says: “FTSE is responsible for the design and ongoing maintenance of the index, which reflects our innovative approach to index methodology and experience in the development of alternative weighted benchmarks.”
This fund is registered in Luxembourg and is the seventh UCITS fund within BRAM’s portfolio. BRAM develops and manages funds for institutional investors, private banking clients, funds of funds and family offices across Europe and Latin America. The launch comes as BRAM studies the possibility of bringing to market a similar alternative beta fund for institutional Brazilian investors.