If You Invested in OTG Latin America ETF (OTGL)

OTG Latin America ETF (OTGL) is an exchange-traded fund listed on Nasdaq that provides actively managed exposure to equity markets across Latin America. According to OTG Asset Management, LTD, the ETF is the result of a conversion of the OTG Latin America Fund into an ETF structure, designed to offer the same actively managed strategy with the structural features of an exchange-traded fund.

The fund is managed by OTG Asset Management, LTD, an investment firm founded in 2010 in South America by business leaders with extensive financial industry experience and regional backgrounds. OTG states that it provides investment choices for U.S. investors through OTGL and for South American investors through separately managed accounts.

Investment objective and strategy

OTGL seeks to harness growth potential in Latin America by investing in companies that, in the manager’s view, may be overlooked. The ETF’s stated approach combines on-the-ground research with disciplined stock selection to identify and capitalize on perceived inefficiencies in Latin America’s emerging markets.

OTG highlights that its active approach is intended to explore changing markets in the region and invest in companies believed to be positioned to benefit from regional growth, innovation, and global integration. The ETF uses a broad and diversified portfolio to target sectors and businesses that, according to OTG, may benefit from Latin America’s expanding middle class, rising digital adoption, and natural resource base.

ETF structure and key characteristics

As an exchange-traded fund, OTGL offers intraday trading on an exchange, with shares bought and sold at market price rather than net asset value. OTG notes that the ETF structure can provide lower fees relative to some mutual funds, flexibility of intraday trading, and potential tax efficiencies, although these benefits are not guaranteed and depend on each investor’s situation.

OTG also notes that ETFs are subject to specific structural risks. These include the possibility that the market price of an ETF’s shares may trade at a premium or discount to its net asset value, that an active secondary trading market may not develop or be maintained, or that trading may be halted by the exchange, which can affect an ETF’s ability to sell its shares. Brokerage commissions on trades can also reduce investor returns.

Focus on Latin American equity markets

The ETF’s strategy centers on Latin American equity markets, with an emphasis on emerging markets in the region. OTG indicates that OTGL targets companies and sectors that may benefit from long-term themes such as an expanding middle class, increased digital adoption, and the presence of significant natural resources in Latin America.

OTG’s description of OTGL emphasizes the use of on-the-ground research in Latin American markets. This research-driven process is combined with disciplined stock selection, with the goal of identifying companies that OTG believes are mispriced or underappreciated within the broader equity universe in the region.

Risks and considerations

OTG highlights that investing involves risk and that loss of principal is possible. The firm notes that the risks of investing in foreign companies, including those in emerging market countries, can increase the potential for losses in the fund. These risks may include currency fluctuations, political and economic instability, less government regulation, less publicly available information, limited trading markets, and differences in financial reporting and recordkeeping standards, as well as differences in regulation of securities markets and accounting methods.

The information provided by OTG also emphasizes that diversification does not eliminate the risk of investment loss. Investors are encouraged to consider the investment objectives, risks, charges, and expenses of the fund carefully before investing and to review the fund’s prospectus for more detailed information.

OTG Asset Management background

OTG Asset Management, LTD describes itself as an investment manager founded in 2010 in South America by business leaders born and raised in the region. According to OTG, these founders possess extensive financial industry expertise and proven track records. The firm notes that it offers investment options for U.S. investors via OTGL and for South American investors through separately managed accounts.

The company indicates that it was renamed OTG Asset Management Ltd. effective October 2022. The ETF is distributed by Foreside Fund Services, LLC, according to the same disclosure.

Investor information

OTG states that investors should review the fund’s prospectus for details on investment objectives, risks, charges, and expenses. The firm notes that this information can be found in the prospectus and that it should be read carefully before investing. OTG also reiterates that shares of ETFs are bought and sold at market price, are not individually redeemed from the ETF, and that brokerage commissions will affect returns.