PLAYING THE REBOUND.

 
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Latin America's hottest investors share their top picks for 2001.

MOST LATIN MUTUAL FUNDS ENJOYED FAT RETURNS THROUGH the start of last year, with a great rebound from the Brazilian devaluation in 1999 and an ongoing expansion in Mexico, plus added zip from the short-lived dot-com rally. Since then, just about everybody has taken lumps. Most folks are happy just to have lost less ground than the overall market.

During these tough times, investors remain focused on the big markets in Brazil and Mexico and on the highly traded stocks--such as Tele Norte Leste and Telefonos de Mexico--because everybody wants to be able to sell if things get even rougher. Especially in Argentina.

"Many people are expecting a crisis in Argentina," says Ernesto Ramos, a partner at Nicholas-Applegate Capital Management, "This is a very good time to be a buyer in the region because the returns are traditionally extraordinarily high after these dips in confidence."

With an eye toward helping readers identify the next big opportunities, LATIN TRADE asked Latin Fund Management and Lipper Analytical Services to compile tables of the fastest growing Latin American and international funds from June 1999 to June 2000. We then asked the fund managers with the hottest hands in Latin America to make their picks for 2001. Here's what they have to say:

BRAZIL

HAYTON PEZZONI

Portfolio Manager

ITAU INSTITUCIONAL ONIX FIA

167.1% annual return

Fund was created at the end of 1997 when foreigners could only purchase ordinary shares of state-run Petrobras through a fund. With legal changes allowing direct pruchases, the highly successful fund is redefining its mission to include more than Brazil's energy sector. Top picks for 2001 include:

PETROBRAS Management measures to improve margins mean, even if oil prices fall to US$25 per barrel, net income will not be seriously affected. The state-run Brazilian company's joint Ventures with foreign partners have boosted exploration and drilling.

USIMINAS The Brazilian flat steel producer will benefit from the expanding local economy through increased sales to automotive and home appliance industries, plus ships contracts with the Brazilian Navy.

GERDAU The Brazilian government is providing construction industry incentives, the most important of which are an expanding economy and falling interest rates, so this producer of long steel--the kind used in buildings--should be a big winner.

ALONSO PEREZMARTINEZ DUPUI CEO Latin America Invesco...

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