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TheStreet Open House

Gold, Silver in Peru Power Mutual Fund

NEW YORK ( TheStreet) -- Investors exploring Latin American equities may want to start their search in Peru, says Heiner Skaliks, manager of the Strategic Latin America Fund (SLATX). His top Peruvian picks include Creditcorp (BAP) and silver miner Buenaventura (BVN).

The mutual fund, launched a year ago, has returned 8% over the past year, according to Morningstar (MORN). The Strategic Latin America Fund is little changed this year.

Welcome to TheStreet's Fund Manager Five Spot, where America's top mutual fund managers give their best stock picks and views on the market in a five-question format.

Why is Peru your favorite Latin American country to invest in now?

Skaliks: They have a good monetary policy and they have also made significant positive changes in their fiscal policy. They have a strong internal consumption base, which is benefitting from their exposure to the increasing price of commodities, especially gold and minerals.

Why is Creditcorp your favorite Peruvian stock, with a plethora of mining companies to choose from?

Skaliks: Creditcorp is one of the largest financial holding corporations in Peru. They also have operations in Bolivia. They have a commercial bank in their portfolio, as well as an asset manager and an insurance company. They have great managers who understand the market and what their customers need. They grew earnings 46% in the first quarter, and they still have room to tap the rest of the population that does not have access to financial services.

Why is Buenaventura your favorite Peruvian mining company?

Skaliks: Buenaventura is one of the largest mining companies in the world and the largest silver mining company in South America. Their operations are very efficient and low cost. They grew 86% in the first quarter year-over-year. And depending on what turn gold takes as a refuge to a weakening dollar, there is potential there as well.

What happens if Chinese demand for commodities slows?

Skaliks: There would definitely be a significant slowdown as far as the commodities market is concerned. That said, consumption in South America is much wider, deeper and stronger than it has ever been and that would help fend off severe adverse conditions created by an external shock from China, for example.

Outside of Peru, why are you so positive on Chile's LAN Airlines (LFL)?

Skaliks: Last year they acquired TAM Airlines, which is based in Brazil. They already have operations in Peru, Argentina and Ecuador. And this new acquisition gives them an opportunity to penetrate the Brazilian market more aggressively. The population of South America is over 600 million people so there is tremendous potential there to increase passenger and cargo traffic.

-- Reported by Gregg Greenberg in New York.

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Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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