BlackRock Latin American (BRLA) has reported a sharp turnaround in the first half of 2025, with net asset value (NAV) rising 40.4% in US dollar terms and the share price up 41.7%, against a 29.9% return from its MSCI EM Latin America benchmark. Net assets increased from US$116m at the end of December 2024 to US$158.7m at 30 June 2025. The shares ended the period on an 11% discount to NAV, a touch narrower than the 11.6% seen at the last year end.
The strong performance was driven primarily by Brazil, where a rebound in domestic markets combined with effective stock selection. Real estate developer Cyrela gained 82% over the period, while supermarket operator Assaí surged 130%. Retailers Lojas Renner and Alpargatas also delivered, as did financials such as XP and fintech group StoneCo, which doubled in value. Precious metals holdings were another source of strength, with G Mining Ventures and MAG Silver both advancing strongly as gold and silver prices rallied. Mexico was another key contributor, supported by a 200bps cut in interest rates by its central bank and a firm peso, which boosted equity returns in dollar terms.
Not all names worked in the trust’s favour. Argentinian IT services group Globant weighed on returns following weak earnings and guidance, while Brazilian iron ore producer Vale disappointed after weather-related production misses. An underweight to Brazilian bank Itaú, which rallied with the local market, also detracted.
Revenue earnings fell 17% to 10.67c per share, reflecting lower dividends from portfolio companies. Total dividends declared for the 12 months to June were 23.47c per share, equivalent to a 4.9% yield on the period-end share price. The board continues to operate a quarterly dividend policy, paying out 1.25% of NAV at each quarter-end, with distributions supported where necessary from capital reserves.
The company used gearing actively during the period, averaging 105.3% of NAV and peaking at 108% in February, within the board’s +/-10% range around its neutral 105% level. The board also reiterated its discount control mechanism: subject to the 2026 continuation vote being passed, a tender offer for up to 24.99% of shares could be triggered if either long-term NAV returns fall short of the benchmark by more than 50bps or the discount averages above 12% over the 2022–2025 period. To 30 June 2025, NAV returns have lagged the index, but the discount has remained below the threshold at an average of 11.2%.
The period also brought a change in portfolio management. In April, Gordon Fraser was appointed co-manager alongside lead manager Sam Vecht, replacing Christoph Brinkmann, who retired. Fraser is a long-standing emerging markets investor at BlackRock and brings nearly two decades of experience to the role.
Looking ahead, the managers say that despite the rally, valuations across the region remain attractive. They see continued opportunities in both Brazil and Mexico, particularly in companies with strong earnings momentum and low leverage, and highlight the potential for buybacks to support share prices. While US tariff policies have introduced uncertainty, they argue the long-term impact is limited: Brazil has diversified its trade links, particularly with China, while most of Mexico’s trade remains covered by the USMCA agreement.
The trust’s board and managers stress the importance of remaining invested through volatility, noting that selective positioning during 2024’s downturn has allowed the portfolio to capture this year’s rebound. They believe the region remains well placed to offer attractive long-term diversification benefits, particularly given its resource wealth and exposure to structural global demand.
QD comment from Matthew Read: BlackRock Latin American’s first-half performance is a reminder of just how quickly sentiment in the region can swing. After a difficult 2024, the trust has bounced back strongly, comfortably ahead of its benchmark, with Brazil once again proving the key driver. The managers’ decision to lean into domestic names during last year’s sell-off looks to have paid off, particularly in retailers and financials.
While revenue earnings fell, the dividend policy – linked to NAV rather than portfolio income – gives investors visibility on payouts and allows the managers to keep the focus on total return. Gearing has also been used effectively, adding to performance in rising markets. The discount remains in double digits, but the board’s discount control mechanism provides some comfort for shareholders. If the team can maintain relative outperformance, particularly in Brazil and Mexico where they still see opportunities, there could be scope for the gap to NAV to narrow further.
