The two funds will subsequently merge into Aberdeen’s Luxembourg-domiciled global SICAV in June, appearing as the Aberdeen Global - Brazil Equity Fund and Aberdeen Global - Brazil Bond Fund, the firm said.

The equity fund will be managed by Aberdeen’s global emerging markets team while the bond fund is to be managed by the emerging markets debt team. Devan Kaloo, head of global emerging markets, and Brett Diment, head of emerging markets bonds, lead the teams respectively. 

Aberdeen notes that during the past ten years, sustained commitment to traditional fiscal and monetary policies from the Brazilian government and central bank has “seen inflation fall significantly,” creating a favourable environment for domestic growth and investment.

“The prudent fiscal policy has transformed Brazil's sovereign credit risk, which is investment grade at Baa2/BBB and expected to go higher,” the firm said. “Demand for commodities combined with tax reforms and prudent government spending policies have led to trade account surpluses.”

Local companies have restructured balance sheets, reduced debt and turned their attention to core skills, resulting in improved profitability and earnings. Moreover, the firm said, the Brazilian economy is now more stable and relies less on foreign inflows of capital.

In terms of fixed income, Latin American economies - particularly Brazil - have “weathered the global financial crisis well” and are therefore unaffected by the debt levels and “imbalances” of their world peers, said Diment. "Yet the yields available in the fixed income market remain at a premium to those offered by fundamentally weaker G7 nation bonds."

“Growing, youthful populations with burgeoning workforces are enhancing earning and spending power in the country, and this in turn is driving domestic growth,” he said.