Fund of the week: Brazil is beginning to deliver

Slower recent GDP growth in Brazil (just 2.7% in 2011 against 7.5% in 2010) has been blamed on the lack of investment in infrastructure "the biggest and the single most important problem" in the region, David Beker of Bank of America Merrill Lynch tells the FT. However, this may be set to change.

A $60bn stimulus package was announced in August to improve Brazil's roads and railways over the next five years. This is a "positive sign that the government is moving from stimulating consumption to encouraging investment", says Joe Leahy in the FT.

Moreover, Brazil's population is the same as Britain's, Germany's and France's together, but with an average age of 27. Clearly, "Brazil's demographics are on the side of the investor".

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But what should you buy? Darius McDermott of Chelsea Financial Services recommends the £74m Aberdeen Latin American Equity Fund, managed by Fiona Manning. It has 65% of its portfolio in Brazil and a further 22% in Mexico. The fund is up so far this year [to 31 July] by 8.62% against a sector average of 3.71%, putting it in the top quartile.

It is effectively a play on falling unemployment and growing real incomes, "which should support consumer spending", notes Rob Morgan at Hargreaves Lansdown. The portfolio has 28% in financials (retail banks should benefit from growth in consumer lending), 18.4% in consumer staples and 16.5% in energy.

Brazil has been branded "the country of the future" that never achieves its potential. But with the right policies, plus the World Cup and Rio Olympics on the horizon, it may now be "starting to deliver".

Contact: 0845-300 2890

Aberdeen Latin Americantop ten holdings