Focus on emerging markets – Colombia attracts foreign investors including funds

An active equities fund in the Colombian market has attracted interest in, and money from, some institutional European investors, perhaps partly as the market has almost doubled in value since 2009.

The Luxembourg-based Colombia Equity vehicle of the Medellin-based Bolsa y Renta has caught the eyes of a southern European family office and of a German insurance company, which recently agreed to be cornerstone investors.

Despite such strong growth in the market, Linus Sluyter, head of business development at Bolsa y Renta, says he finds it surprising that there are almost no dedicated funds focused on Colombia.

He describes the country as “one of the most progressive rising stars in Latin America”.

There are two ETFs listed in New York focused on Colombia, and Bolsa y Renta’s actively managed fund, managed by Alejandro Correa (pictured), is another.

The fund is available to Europeans via a Luxembourg Ucits IV-compliant Sicav vehicle, registered for sale in Germany, with only slightly modified investment restrictions compared to its Colombian onshore fund.

Its domestic equities fund was launched in February 2007, and has since outperformed by 3.6% per year, taking into account the 3% management fee, versus its benchmark – the Colcap Index, consisting of the market’s 20 most liquid stocks. The fund has beat its peers in four of the past five years.

Since February 2007 it made 20% annualised, on 26.3% annualised volatility, and tracking error of 8.7% when measured in US dollars. Its beta is 0.92, its information ratio 0.75.

The fund is 100% Colombian equities. A glance through the exposure to Colombia of 30 Latin American equities funds early this year showed only two – Pioneer Funds Latin America Equity and F&C Latin America – had over the 4.1% allocation of the MSCI EM Latin America index, as of February.

 

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