Excel Funds Management Inc.

Emerging Markets


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Latin American Middle Class Grows by 50 Million

Back in 2003, the middle class population of Latin America and the Caribbean was about 103 million. In 2009, it was an estimated 152 million, an increase of almost 50 percent. The increase is due to a successful result of the economic policy by Latin American and Caribbean governments. But the lower class has grown even larger, according to a recent report by the World Bank. Jim Yong Kim, President of the World Bank, says that one third of the population is still in poverty. Although little progress was made in the region to reduce poverty and grow the middle class, more recent changes show that this impressive boost is due to economic stability and growth in the region along with more recent changes emphasizing the delivery of social programs.

 

Middle class within LAC are not considered rich but are economically secure – or have less than 10% chance of slipping into poverty. An earning of at least $14,000 per year, would put a family of four into the middle class. A household making less than $4 a day is considered poor, while those earning from $4 to $10 are economically vulnerable. Today, the middle class and the poor account for roughly the same share of the population – 29% and 31% in that order – while the economically vulnerable now make up the majority. A rapid growing middle class only means positivity for the economy and investors.

 

Written by Melissa W.

 

http://abcnews.go.com/ABC_Univision/News/latin-american-middle-class-grows-50-million-world/story?id=17711973


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Why have Emerging Markets Equities responded favourably?

The Wall Street Journal’s Jake Lee discusses some of the reasons why Emerging Markets Equities have responded favourably, recently.

Jake mentions the recent spate of “easy money” policies out of the Federal Reserve Bank, in the US, a “dovish” ECB which recently cut rates by .25 bps and introduced its’ new bond buying program.

“If you had invested in Asian stocks you couldn’t have gone wrong” Mr Lee mention went to cite broader indices in Thailand which have risen as much as 28%.

 

The Excel Emerging Markets fund, recently recognized with the 2012 Lipper Awards for best EM equity Fund over 1 year, makes a compelling investment vehicle for investor portfolio exposures to the Emerging Markets. The fund offers broad diversification, strong and active portfolio management as well as a proven track record.

Written by Jack S.

Read More: {Video} http://live.wsj.com/video/what-driving-investors-back-to-emerging-markets/3AFE3436-A14E-46C7-A52E-88975D650FB7.html#!3AFE3436-A14E-46C7-A52E-88975D650FB7


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There has been an increase in total volumes for Latin American bond

Recently, there has been an increase in total volumes for Latin American bonds. Brazil is the largest issuer in terms of deals and volumes with 45%. Mexico is also considered very strong with an improving economy which is leading to higher demand for its bonds. Mexico has been decreasing the amount of sovereign bonds as funding needs have diminished. In a low interest rate environment and higher coupon rates for emerging market debt, these factors are contributing to the higher demand for Latin American bonds. It is extremely difficult to find high yield bonds in developed countries leading investors to explore other avenues. Excel released an IPO of the “Latin American Bond Fund” on June 19th 2012. Since its debut on the TSX it has been trading above its original price of $10. As of Oct 12, 2012 it’s trading at $11.48. The ticker symbol is ELA.UN and is a great way to earn higher yield with quarterly distributions. Clients are looking for new opportunities from investments to earn income and grow their portfolios. This product is also a great way to help clients diversify their portfolios.

Written by Jeff K.

Dwyer, R. (2012, October). Euromoney. Latin American Issuers attract record crowds. Retrieved October 15, 2012, from  http://www.euromoney.com/Article/3098999/CurrentIssue/86809/DCM-Latin-American-issuers-attract-record-crowds.html

 


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Many of the BRIC countries are rich in resources, have an abundance of young and very educated work force that will continue to accumulate wealth and therefore demand and consume more.

There are numerous reasons to invest in BRIC countries over the next decade.  First and foremost, the BRIC and emerging markets nations are not riddled with debt and are building up their foreign currency reserves which has helped them enjoy credit upgrades rather than downgrades by S&P and Fitch which we have noticed with a number of developed nations over the past year.  Many of the BRIC countries are rich in resources, have an abundance of young and very educated work force that will continue to accumulate wealth and therefore demand and consume more.  Nigel Green who is the boss of the world’s leading independent financial advisory group says that “Aggregate consumption between the four countries is currently estimated to be around 4 trillion dollars and this is expected to grow by around 15% to 20%. Therefore, by the middle of the decade, the BRIC nations will see their combined consumption increase by more than a trillion dollars – and this is a conservative estimate.”  Starbucks is quick to recognize this domestic consumption story and will be trying to capture part of the growth by opening its first establishment next month as part of an overall investment of approximately $78M in the subcontinent.  Green believes it would be wise given the current market conditions to have a very diversified portfolio and to follow in Starbucks strategy and incorporating BRIC nations in your balanced portfolio.

 

Goldman Sachs Jim O’Neill also believes that the Next Eleven (N-11) namely Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, Turkey, South Korea and Vietnam, alongside the BRIC nations are also very noteworthy countries to be investing in over the next decade.  Mr Green notes that “It is estimated that within the next decade the combined GDP of the BRIC and N-11 countries will be double that of Europe and the US together.”

 

With this in mind, our BRIC Fund not only invests in BRIC countries but also other emerging markets nations, is coming up to a 3 year track record come November 2nd, 2012.  It is not only the best performing BRIC mutual fund in Canada but it has also done well this year with a gain of 5.89% YTD (Source: Globefund as at October 5, 2012).

 

Written by Devin L.

 

Please see the following article for more information:

http://investmentinternational.com/news/alternative-investments/follow-starbucks-example-5155.html


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Green BRICS

Investors are starting to realize that through the European debt crisis; most emerging market countries took the time to re-organize their economies, maximize efficiencies and are now better prepared for the next phase of growth. These measures have included greater debt-servicing measures, managing inflation rates and developing more sustainable resources for long term growth.

The emerging markets have immense numbers of urbanizing, educated and wealthy youth with ferocious appetites for goods and services. A massive manufacturing industry is not anything new when reading about China or India; however, reading about renewable and sustainable energy with international recognition is new to many BRIC investors.

Above and beyond the clear positive environmental effects, these initiatives speak to a maturing in BRIC country leaders. It speaks to leaders that realize with over 70% of the population of which 45% are under the age of 25, a short or even medium term plan is not enough. Most importantly it speaks volumes to investors across that the BRICs are continuously evolving to accommodate long term growth.

The emergence of the BRIC nations as global powerhouses is in full swing and their long term growth is being enhanced daily – where are you invested?

Written by Jeremie C.

Is Latin America and the Caribbean turning on to energy efficiency?

Renewable Energy – Top 5 Emerging Markets Industry Guide


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In Brazil: The Poor get Richer, Faster

In North America, the rich are getting richer faster. In South America, Brazil, the poor are getting richer faster. In terms of income, Brazilian workers make up the lowest 10% of the labor force, and had higher salary increases than the remaining 90% of the labor force. Wages for Brazil’s poorest workers grew an impressive 29.2% between 2009 and 2011, and during the same period, the average income of the general labor grew 8.3%. That is a significant difference than U.S. raises. This is showing that even the poorest contribute to the growth of the country. The average monthly income of workers in Brazil show a gain of 4.6%. While the poor are getting richer in Brazil and the poor are getting poorer in the U.S, there is still no comparing poverty or middle class incomes in the two countries. Over the next several years, Brazil has a ways to go before there is more uniformity in the social class when comparing social services in the U.S. But if the U.S. stays the way it is with low wages and high education costs, we should be on par with Brazil in a couple of generations.

Excel’s Latin America Fund invests 60% of its country allocation in Brazil which, as we see in this article, has a significant growth potential. 21.1% of the portfolio is allocated to financial services. With the wage increases, people will be buying more, using the banks for savings, and purchasing homes. By staying or investing in this fund, you benefit by gaining investment exposure to one of the fastest growing regions in the world. With Brazils population being 199 million with the average age being 29.6, the work force is raising and won’t diminish any time soon. And even with the poorest contributing to the growth of the country, the economic development will be moving rapidly.

Written by Melissa W.

http://www.forbes.com/sites/kenrapoza/2012/09/25/in-brazil-the-poor-get-richer-faster/


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Itau Buys $5.17 Billion Redecard Shares in Tender Offer

Itau Unibanco Holding SA (ITUB4), Latin America’s biggest bank by market value, purchased 299 million shares of Redecard SA for 10.5 billion reais ($5.17 billion) as it completed its plan to take the credit-card processor private.

Redecard will be de-listed from the Bovespa and Itau “will absorb Redecard, and that will create synergies and they will be able to cut costs,” said Pedro Galdi, chief strategist at brokerage SLW Corretora in Sao Paulo. “It was a long process, like a soap opera, but now Itau has reached its goal.”

With a pre-existing 50% stake in Redecard , Itau Unibanco decide to consolidate their payment processing systems in the face of stronger central bank deregulation of the space in Brazil.

Redecard was created as a spinoff of Credicard in 1996 by Citigroup Inc., Banco Itau Holding Financeira SA and Uniao de Bancos Brasileiros SA, known as Unibanco, to process credit-card payments and merchant-acquiring businesses, according to its website. Barueri, Brazil-based Redecard raised 4.07 billion reais in an initial public offering in July 2007.

Itau Unibanco, is the sub-advisor on the Excel Latin America Fund. The fund’s mandate is to seek long-term growth by investing in equity securities of publicly traded Latin American companies. As of Sept 1, 2012 the fund has retunred 1.8% and 8.8% since inception.

Written by Jack S.

 

Source: Itau Buys $5.17
Billion Redecard Shares in Tender Offer