Raiffeisen Capital Management, the asset management arm of Austria's RZB banking group, is looking to add sterling share classes to its range of eight European bond and equity Ucits III funds.
RCM’s London sales manager Simon Mansell said the group’s range, which is domiciled in Vienna, has been registered in Jersey and the UK since early 2007.
The funds are Raiffeisen Euro Bonds, EuroPlus Bonds, Eastern European Bonds, Eastern EuropeanPlus Bonds, European SmallCap, Eastern European SmallCap, Eastern European Equities, Eurasia Equities and Emerging Europe SmallCap.
The Eurasia portfolio is broadly invested 30% each in China, India and Russia, with 10% in Turkey, while the Eastern European equity fund is currently overweight in Hungary and Turkey, and underweight Poland and Russia.
The Eastern European fund’s manager Gregor Holek does not believe the election of the new president of Russia, Dmitry Medvedev, as successor to Putin, will make any significant difference to the outlook for the Russian market.
He says that although he expects Russian GDP growth to slow to around 5% a year, the government is still committed to huge infrastructure spending, which both underpins domestic investment and provides opportunities for Western companies.
He believes concerns will remain over political interference by the government into the ownership by foreign companies of key assets such as energy businesses, but does not think these will hold back the overall market.
Holek said: “Private consumption is becoming an increasingly strong growth driver thanks to high wage growth. Disposable real income has risen 11% annually since 2000.”
He believes this will benefit stocks such as retail company Vimplecom or domestic bank Sberbank, while raw materials stocks such as Gazprom, Lukoil and Norilsk Nickel will be beneficiaries of the growing domestic and international demand.
He also likes the Kazakhstan stockmarket, which although much smaller than Russia’s, will benefit from the same economic themes of rising consumer spending and the demand for raw materials.
Holek has some exposure to Ukraine in the fund but it is limited due to poor levels of liquidity in the country’s stock exchange and the lack of corporate transparency in many of the domestic companies.
Russia is the largest exposure in the portfolio, accounting for around 55%, with Poland, Turkey, Hungary and the Czech Republic being the other significant country bets.
The €1.02bn fund has returned an annualised 13.29% since inception in February 1994, but on a one-year basis to the end of January had returned only 1.70% compared with the benchmark MSCI Emerging Europe index return of 3.59%.
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