Our fund had another strong month, and much of the upside came from our Mexican holdings.

 

March

2017 Year to Date

Since Inception

(Annualized)

Inception Date: 11/1/2011

Motley Fool Emerging Markets Fund (TMFEX)

3.89 %

7.71%

4.96%

FTSE Emerging Markets All Cap China A Inclusion Index

2.19 %

10.72%

3.09%

 

For a standardized list of performance for the Emerging Markets Fund, please click here. For fund holdings, please click here.

March was a good month for the Motley Fool Emerging Markets Fund, continuing the strong performance for both the fund and its benchmark so far this year. We further reduced the number of holdings in the fund as we focus on investing in the most attractive long-term opportunities.

One of the positions we sold this month was BRF, more frequently referred to as Brasil Foods. This global seller of poultry does quite well at home in Brazil and in the Middle East. It is dominant in Saudi Arabia and is expanding there and elsewhere in Asia, but competition has been increasing, most notably from Almarai, one of our largest holdings in the fund. These moves point to a tremendous long-term growth opportunity, but we had been growing concerned over BRF’s competitive advantages and its cash-generating abilities. Then allegations broke during the month that BRF was bribing health inspectors. While it’s unclear if there was harm to consumers, the allegations have damaged the brand and caused increased scrutiny from import regulators in several countries. We chose to sell our shares and look for better opportunities with your cash.

We also closed our investment in Nestle. We still think Nestle is a tremendous company, but although roughly half of its business takes place in emerging markets, it doesn’t entirely fit within our emerging-markets focus. We also began to sell Groenlandsbanken (Bank of Greenland), while taking advantage of some volatility to add more Sberbank.

The list of our best performers for the month was dominated by Mexico, which three of our top seven gainers call home. Mexico tends to take center stage this way when the peso increases more than 7% against the dollar. Gentera, which we purchased in February, returned 24% for the month (16.5% in local currency), while fellow Mexican businesses Grupo Aeroportuario del Pacifico and Grupo Aeroportuario del Sureste returned 12% and 9%, respectively. International Container Terminal Services (+21%), Mitra Adiperkasa (+17%), BGEO Group (+15%), and Douzone Bizon (+10%) also did quite well for us. Bonus points if you noticed the name change for our long-time South Korean holding, which decided to change its English spelling while leaving it unchanged as 더존비즈온 in Korean.

In contrast to the returns from our Mexican investments, Brazil had a negative month. In addition to the news about BRF that contributed to our sale, our two worst performers were Odontoprev (-8%) and Tarpon Investimentos (-7%). Tarpon, a Brazilian asset manager, owns 12% of the shares in BRF, so we still have an indirect exposure to the business.

The Emerging Markets Fund changed its benchmark from the FTSE Global All Cap ex-US (Fair Value 16.00 EST) Net Tax (US RIC) Index to the FTSE Emerging Markets All Cap China A Inclusion (Fair Value 16.00 EST) Net Tax (US RIC) Index on February 28, 2017.

The Emerging Markets Fund changed its name from The Epic Voyage Fund on February 28, 2017.

 

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