Comprising the Latin American countries of Mexico, Colombia, Peru and Chile, the Pacific Alliance was formed in 2012 as an initiative to increase competitiveness through integration of these economies, and to allow for the free flow of capital, goods, people, and services amongst its members. Another objective is to expand trade between the Pacific Alliance and Asia-Pacific countries.
It is a fast growing region, driven by strong demographics and the growth of internal demand.
As an Emerging Market investment strategy, it provides significant diversification and strong performance benefits to support its inclusion in a growth portfolio.
A fast growing region
The Pacific Alliance represents more than 55% of Latin America’s exports, over 40% of its total Foreign Direct Investment flows and 40% of its GDP.
The region is fast growing, driven by a number of factors including strong demographics and the growth of internal demand. With a collective GDP of US $2.2 trillion, the integration of a common market within the Pacific Alliance provides for efficiencies in accessing the region’s securities exchanges.
Mexico is the largest economy in the group and is positioning itself as a competitor to China for manufacturing, with low labor costs which challenge those of China and the United States of America. Chile and Peru went through a strong reform process in the 1990s, which now underpins their current strong growth trajectory. The IMF cited domestic consumption, record-low unemployment and wage growth in Colombia, Peru and Chile when it made recent GDP predictions of an average growth rate of 4% (IMF World Economic Outlook, 2015).
Commitment to stable legal and regulatory systems
The countries within Pacific Alliance share a focus on strong and transparent government and on openness to foreign investment. They are viewed by external commentators as having a history of relative stability and a stronger commitment to free trade and rule of law within Latin America.
As a result, the Pacific Alliance Region offers a stable legal, political and regulatory environment which exploits trade opportunities within and outside of the region as a unique investment opportunity in Latin America.
A key growth region within Emerging Markets
The Fund provides direct access to investing in the fast growing Pacific Alliance region with the assistance of a local expert. Notwithstanding the ups and downs of the Global economic cycle, these economies will play an important role as part of the process of economic consolidation and growth in the Latin American region which continues today and in the future to come.
The Fund provides a unique position to exploit market opportunities in an area which we view as a key growth area within Emerging Markets.