| Fund Company | TD Mutual Funds |
| Fund Type | Miscellaneous – Geographic Equity |
| Rating | C |
| Style | Large Cap Growth |
| Risk Level | Very High |
| Load Status | No Load / Optional |
| RRSP/RRIF Suitability | Poor |
| TFSA Suitability | Poor |
| Manager | Ana Christina Piedrahita since December 2002 Gaite Ali since February 2008 |
| MER | 2.88% |
| Code | TDB 651 – No Load Units TDB 281 – DSC Units |
| Minimum Investment | $500 |
Analysis: As interest in the emerging markets continues to grow, it’s not surprising that some investors may way want to add additional exposure to particular developing regions such as China and Latin America. This fund is one of only a handful that is focused on Latin America.
It invests in companies that are located in Mexico, Central America and South America. As of December 31, it was 54% in Brazil, 26% in Mexico and 10% in Chile. Christina Piedrahita and Gaite Ali of Morgan Stanley manage it. When considering a company for inclusion in the fund, the look for those with sustainable competitive advantages and compelling long term growth opportunities.
Their approach is fairly patient, with portfolio turnover averaging a very modest 40% for the past five years. The portfolio is well diversified, holding 55 names with the top ten making up just over 40% of the fund.
Performance has been largely uninspiring, with a five year annualized loss of 2.4% as of December 31, which is middle of the pack for the other Latin America focused funds. Like other geographically focused funds, it is significantly more volatile than the broader equity markets. In fact, it is about 1.5 times more volatile than the MSCI EAFE Index.
While we understand the appeal of a fund like this, it is our opinion that most investors are best served using a more broadly focused emerging markets fund. These funds provide the managers with considerably more leeway in managing the funds. But, for those looking for pure Latin American exposure, this isn’t a bad option.
Considering the volatility profile, it is our opinion that this is only suitable for those investors with a very high-risk tolerance and who are comfortable with the risk of a big drawdown.