Aberdeen Latin America fund HL

cloud_dog

I suppose a new fund could have a an advantage under certain circumstances.

In these volatile times there may be opportunies for a fund with avaialble cash to tkae a position in a company at a beneficial price. But thats the only real advantage I could imagine for a new (cash rich) fund.

jamesd

It isn't a fixed price offer. Just the standard 4.25% initial commission waived when dealing via HL, just as for other established funds like Aberdeen Emerging Markets, and HL saying that they are the only place you can buy it at launch. Which is presumably a little different from the first pricing point on the first day. Not that there's any point to the difference, since you'll still get exactly what your money buys and nothing more.

I assume that initial buyers will get a bid price priced on offer basis instead of bid basis, so will pay more than later buyers who'll have some sellers to cut down on the unit creation costs a bit. people who don't understand what I'm talking about can ignore these points, they are unlikely to lose initial buyer more than 0.1% or less.

DavidHayton

What we don't know is how much HL is being paid by Aberdeen to push this fund so aggressively. I would wait and see how it gets on before putting any money in.

To be honest, I prefer Investment Trusts for this sort of venture. Sentement among investors can be fickle. If lots want to sell then the manager of an open ended fund has to dump stock at whatever price they can get. An investment trust would also suffer - and the stock would trade at a discount - but this can be recovered later. Distressed sales can't.

David

jimjames

DavidHayton wrote: »

What we don't know is how much HL is being paid by Aberdeen to push this fund so aggressively. I would wait and see how it gets on before putting any money in.

To be honest, I prefer Investment Trusts for this sort of venture. Sentement among investors can be fickle. If lots want to sell then the manager of an open ended fund has to dump stock at whatever price they can get. An investment trust would also suffer - and the stock would trade at a discount - but this can be recovered later. Distressed sales can't.

David

I agree about Investment trusts for this kind of sector. I hold Black Rock Latin American and have done for around 10 years when it was an F&C fund.

Presumably on day 1 all the investment is the cash received from investors and the manager then goes on a buying spree to invest it all. That sounds like it might not be the best time to buy in and get the best long term performance. On the other hand it does mean the manager has a clean sheet to start from.

Loughton_Monkey

I'm unsure of the exact economics of a fund.

Any fund has an initial charge and a 'management' charge, of (say) 1.5%

So the fund starts (I suspect) with a little 'seed capital' from some other fund. Given £1 million to invest on day 1, the fund manager now has to buy a few equities. Therefore he has to pay a few share dealing costs. He buys at $4.05 and can only value them at $4.02 because of 'bid offer'. Are these costs literally 'charged' to the 1.5% fee? Or are they borne by the basic value of 'our' units?

If the latter, then while the fund is small, this is going to 'underperform' until it gets bigger. If the former, then there is still not enough to pay all these fees plus the fund manager's meagre salary, plus that of a few admin people.

I'm suspicious!

mr_fishbulb

dano1234 wrote: »

What do you think about this fund / potential for market growth over the next 5 years?

Would this be a good investment?

Were you thinking of investing in Latin America before H-L started saying about this fund?

I think there is some growth potential for Latin America driven by demand for natural resources which may, in tern, boost their home economies. Then again they do have a history for exploding economies.

dano1234

mr_fishbulb wrote: »

Were you thinking of investing in Latin America before H-L started saying about this fund?

Yes i have been thinking of investing in a Latin America fund anyway, as i am just starting to build a portfolio of funds.

I think the potential for growth is great, although i appreciate that these kind of funds are high risk.

Due to my age and risk profile the risk is acceptable.