Eastern Europe has not been insulated from sovereign debt shocks and the knock-on effect of policy problems in the eurozone, but who have been the standout fund managers?
There are 82 fund managers in the Citywire database boasting a five-year track record on a dedicated Eastern European equity fund.
Over the period December 2008 to December 2013, the most commonly held benchmark, the MSCI EM Eastern Europe TR USD, rose 104.99% in US dollar terms. The average manager in the sector returned 75% over this time frame.
Out of this class, there are only three fund managers who have beaten the average peer performance in each of the five individual years.
So who are these outperforming managers and how did they manage it?
Sulev Raik, SEB
Best year of outperformance vs. average manager: +14.37% in 2008/09
SEB’s Sulev Raik posted the lowest five-year total return out of the three managers in our analysis but still managed to break 100% while running three separate funds covering the Eastern European market.
Raik, who this month stepped down from the SEB Eastern Europe Small Cap fund, has a large amount of his funds invested in the Polish and Russian markets.
For example, the SEB Growth Fund, which he co-runs with Alo Kullamaa, has over 70% currently allocated to these two markets alone. On a sector basis, financials is the main area of investment.
Irina Topa, AXA Framlington
Best year of outperformance vs. average manager: +8.12% in 2009/10
Irina Topa has outperformed her peers in each of the past five years while having almost two-thirds of the €20 million fund exposed to the Russian equity market.
Russia is by far the most dominant part of the fund’s geographic exposure, while Turkey (11.8%) and Poland (11.7%) are the only other markets to receive notable investment.
Partly due to this country allocation, energy is the largest sector bet, making up 36% of the fund’s sector exposure in the latest factsheet. This is further emphasised by the top 10 holdings, which features six Russian oil, gas or energy companies.
Stefan Bottcher, Manulife AM
Best year of outperformance vs. average manager: +22.97% in 2008/09
Rounding off our list and posting the strongest single year of outperformance is Stefan Bottcher, who has run the Manulife Emerging Eastern Europe fund since January 2001.
According to the most recent available data, Bottcher is another outperformer to have invested largely in the Russian market, which makes up between 30-40% of the fund’s geographic exposure.
In a similar vain to Topa, the fund therefore has a large allocation to energy (25%), but financials receives almost as much attention, with stocks from this sector making up 20% of the overall exposure in the latest available figures.