Carlos de Leon and Michael Konstantinov have revealed the sector positions in their new Allianz RCM Brazil fund.
The managers have overweighted industrials, healthcare and consumer discretionaries, while they adopted underweight positions in materials, consumer staples and utilities.
The biggest allocation in absolute terms is financials, with 28.6%, followed by materials at 16.2% and energy at 14.2%. De Leon and Konstantinov aim to achieve capital growth and at present favour mid and small caps, where they find the most compelling investment opportunities. (article continues below)
“We try to identify investment themes although this is not a theme fund,” DeLeon says. “Our process is research driven and we focus on fundamentals.”
According to the fund’s mandate, the managers can invest up to 30% in companies that have their registered head office in a different Latin American country or any other country.
However, apart from a small cash position, the fund is fully invested in Brazilian equities.
“There are good opportunities in Brazil and at the moment there is no need to invest in other countries,” de Leon says. “We will consider changes when valuations are better elsewhere or when there are changes [in Brazil] such as policies, regulation and taxation.”
De Leon and Konstantinov hold 36 stocks but they are likely to increase this to 50 stocks, provided they find suitable investments.
Among their highest conviction holdings is OdontoPrev, a dental insurance group that is already dominating the market and has signed a distribution agreement for its dental plans with two leading banks.
Other high conviction holdings are Anhanguera, one of Brazil’s largest providers of post-secondary education, which is growing organically and through acquisitions, and OGX, an oil and gas provider that has a large and diversified portfolio of resources.
The launch of the Allianz RCM Brazil fund was delayed by several weeks until October 7 as the Brazilian elections went to a second round. De Leon says that even though the result of the elections was widely anticipated, stockmarkets priced in uncertainty.
They were also nervous about the effects of the Petrobras share issue, one of the biggest in corporate history.