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Key highlights
- Latin America outperformed both emerging and developed markets in 2025.
- Commodity price strength and political developments lead to impressive regional gains, led by Argentina and Chile.
- Recent strong performance has not erased a decade of relative underperformance, leaving Latin American equities looking attractive on 11x forward earnings, a 20% discount to the broader emerging markets.
Performance
The Liontrust Latin America Fund returned 4.1%*in sterling terms during the quarter, compared with a return of 8.3% for the MSCI EM Latin America Index and 5.7% for the IA Latin America sector (both comparator benchmarks).
Commentary
The outperformance of Latin American equities continued into year end, returning a further 8.3% in the final quarter and extending the gains over both emerging (+4.8%) and developed (+3.1%) markets.
The global backdrop remained supportive, with synchronised central bank easing and a clear pivot in the Fed’s reaction function toward downside employment risks. The Fed cut rates twice during the quarter and, with continued benign inflation readings, further easing is expected through 2026. While China’s economic data improved at the margin into year end, with December’s manufacturing PMI moving back above 50 for the first time since March, Q3 GDP growth of 4.8% reinforced the view that policy support was stabilising activity rather than reaccelerating it. Fiscal policy is expected to be more proactive in 2026 with emphasis on domestic demand, innovation and the safety net.
There were a number of notable political developments in Latin America during the quarter, and markets were also supported by the strength in metals prices. In October, Argentina’s Javier Milei performed far better than had been feared in the mid-term elections – with his LLA party now having much greater representation in Congress he is able to continue with his reform agenda and the vote share bodes well for re-election in 2027; in November, Chileans voted right-wing Jose Antonio Kast to be the country’s next president, continuing the shift to the right that we are seeing across the region and ushering in a period of orthodox, and far more business-friendly, economic policies aimed at rejuvenating investment and raising productivity; finally, in Brazil, Jair Bolsonaro endorsed his son Flavio to be the presidential candidate for the right, ahead of more popular and market-friendly options like Sau Paulo Governor Tarcisio de Freitas.
There were strong gains in metals linked to the energy transition, and gold continued its impressive run. Silver (+53%) has many of the same macro drivers as gold but is also seeing strong industrial demand leading to a very tight market – particularly for solar and EV-related applications. The copper market continues to battle supply constraints while seeing strong demand coming from the transmission grid capex required to connect new sources of renewable power and handle rising data centre demand. Lithium is emerging from a multi-year downcycle with supply rationalisation helping to tighten the market after a period of significant oversupply. While the West eases EV legislation and pushes back targets, China in particular continues to drive demand in new energy vehicles, and energy storage is accounting for a greater share of lithium consumption.
Political developments along with strong commodity prices led to impressive gains across the region, with Argentina (+65%) and Chile (+25%) leading the way, followed by Colombia (+18%) in anticipation of political change following the country’s presidential election in May. Brazil and Mexico (+4%) lagged but still performed well in a global context, with more caution being taken ahead of Brazil’s presidential election in October and while Mexico navigates the review of the USMCA trade agreement with the US and Canada.
Within the Fund, notable positive contributions came from Chilean lithium producer SQM (+60%), banking group Banco Itau Chile (+44%) and Brazilian waste management solutions company Orizon Valorizacao de Residuos (+22%). This was offset by weakness in Brazilian consumer and industrials companies as domestic cyclicals sold off following the endorsement of Flavio Bolsonaro to be the candidate for the right.
Latin American equities are trading at 11x forward earnings, a 20% discount to the broader emerging markets. The 2025 rally has not erased a decade of relative underperformance, leaving an attractive starting valuation as the region’s shift to the political right continues and the earnings outlook improves with economic recovery and a return to policy orthodoxy.
Discrete years' performance (%) to previous quarter-end:
| Dec-25 | Dec-24 | Dec-23 | Dec-22 | Dec-21 |
Liontrust Latin America C Acc GBP | 35.1% | -19.9% | 17.8% | 15.2% | -16.1% |
MSCI EM Latin America | 44.1% | -25.1% | 25.2% | 22.6% | -7.2% |
IA Latin America | 38.7% | -25.0% | 23.2% | 16.4% | -11.5% |
Quartile | 4 | 1 | 4 | 4 | 4 |
*Source: FE Analytics, as at 31.12.25, primary share class, total return, net of fees and income reinvested.
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KEY RISKS
Past performance does not predict future returns. You may get back less than you originally invested.
We recommend this fund is held long term (minimum period of 5 years). We recommend that you hold this fund as part of a diversified portfolio of investments.
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