Performance Review 2008
Performance Review 2009
Performance Review 2010
Performance 2011 - Year-to-Date
Please see chart below on the fund’s relative performance versus benchmark index before and after the fees as of end-October 2011.
Alo Kullamaa: "Versus the internally comprised peer group of 12 funds with similar profile the Fund had #2 and #3 rankings respectively for 36 months and 12 months periods.
The fund’s benchmark is currently the MSCI Converging Europe Custom 10/40 EUR Net Return index. This is a customized index designed by MSCI exclusively for the fund’s purposes and with daily time-series and constituent weightings available by request from us only and not in Bloomberg. Official long name for that index is MSCI EFM Europe and CIS ex Russia, ex Ukraine, ex Kazahstan 10/40 index.
The benchmark was changed on May 2nd 2011, until that date the fund’s benchmark was Nomura Central and Eastern Europe ex-Russia index in EUR. Benchmark change was triggered by the need to include Turkey in order to reflect better our investment universe. Other than that there were only minor changes to sector and country allocations. Secondly the new benchmark facilitates performance attribution measurement. There was no change to investment approach due to benchmark change.
The fund had adopted ex-Russian orientation and Nomura index as a benchmark on 19th January 2007 – before that date it was a pan-Eastern European equity fund with investments also in Russia."
Investment Process and Strategy – How does the Fund Manager invest?
Alo Kullamaa: "We believe that we are able to create added value to our investors by following a structured and bottom-up-focused investment process. We seek companies with above average earnings growth potential, but we also have an eye on value – we seek not to overpay for growth prospects (growth at a reasonable price). We stress the importance of qualitative analyses in these markets. Continuous dialog with companies is critical in identifying the quality of the management, its shareholder orientation, the quality of corporate governance practises, how minority interests are protected, etc. Therefore meetings with management, company visits, field trips, conference calls are important components of our overall evaluation process.
The investment universe comprises of 4 emerging markets (Poland, Turkey, Hungary, Czech Republic) and 9 frontier markets in Eastern Europe. We emphasize sector dimension over country dimension, ie we pick stocks within sectors across countries. The fund manager strives to be fully invested and holds a cash level below 5% normally. The size of individual position is primarily a function of the fund manager´s convictions in combination with liquidity considerations. The fund invests mainly in large caps but we also put significant efforts finding good investment ideas within the SME segment, an area that often is overlooked by the investor community in Eastern Europe. We are ”benchmark aware” but not benchmark driven as we manage this fund with a TE-target of 5-10% against its benchmark.
Currently we have in sector allocation only very limited bets preferring Financials to Telecoms. We are mostly focusing on stockpicking and finding relative value mostly from inside sectors."
Investment Outlook
Alo Kullamaa: "Due to global uncertainties the volatility may remain elevated near-term in our region as well, but we expect markets eventually to reflect smaller indebtedness and better growth outlook of Eastern European countries and companies in general and see increasing support from valuations which are deeply below longer-term averages in most markets.
We especially like bigger countries which are not so export-dependent and with growing importance of domestic consumer such as Poland, Turkey and Romania.
At the same time smaller frontier markets in the region are often still totally overlooked by international investors leaving many stocks mispriced.
Longer-term, rising equitisation as a result of privatizations through listing and growing importance of domestic pension and mutual funds is a structural positive that is likely to make markets more efficient."
