T. Rowe Price Latam fund eyes bigger Chile stakes

By Fiona Ortiz

SANTIAGO, Chile (Reuters) - T. Rowe Price Group's Latin America Fund, which is very underweight Chile, may begin buying Chilean firms that are looking less expensive than they used to, the fund's manager said on Thursday.

The $1.65 billion fund has 1 percent of its investments in Chile, compared to 8 percent in the benchmark index. The fund is overweight Brazil, Mexico and Argentina.

"I hope it changes in the future. I think Chile is a great example for the region. It's a great economy, and I keep going there every year and there are some very good companies but valuations have always looked very expensive," fund manager Gonzalo Pangaro told the Reuters Latin America Investment Summit.

"Now after several years of underperformance, valuations are starting to look more attractive. So hopefully our Chilean exposure will grow going forward but we are very mindful of valuations," he said. Pangaro spoke by telephone from London to Reuters reporters in New York and Chile.

He said valuations in Chile have come down gradually over the last year as earnings gains have outstripped the rise in stock prices.

Price-to-earnings ratios, or valuations, measure the relationship between the total value of a company's shares and projected earnings over a year.

"Valuations in Chile, usually north of 20 times, are now in the mid-teens," he said.

Chile's IPSA .IPSA blue-chip index of 40 most-liquid stocks closed at its highest level in more than seven months on Wednesday, and is near its all-time record high hit last August.  Continued...