e-fundresearch: „Which factors had the most impact on the Russian stock market in the last few months and which will be the most important for the coming 12 months?”
Sulev Raik: „In the last few months Russian elections, global macro and Eurozone contributed most to the volatility in my view. After the elections and some positive newsflow from the US and Eurozone investors started to care more about fundamentals again and suddenly Russia looked very attractive given that the market was down 20% in 2011 while average EPS was up 30%. In addition to valuations one should continue to consider global economic and commodity trends, because Russia is not an isolated island, but part of the global economy. However, coming weeks and months are important as we get more clarity on how the new cabinet will look like.”e-fundresearch: „Which are the most important elements in your investment process and which benchmark is used?”
Sulev Raik: „We use MSCI Russia 10/40 TR Net index for the benchmark from 2011. Before that the benchmark index was RTS index. Our investment style is GARP – growth at a reasonable price. We believe that we are able to create added value to our investors by following a structured investment process and focusing primarily on stock selection.”e-fundresearch: „Which over- and underweights are currently held in the fund?”
Sulev Raik: „We have found interesting ideas from consumers, industrials, health care and real estate development. These bets are financed by underweighting energy complex and telecoms. The portfolio is skewed towards growth and has domestic focus. However, oil&gas is still the largest part of the portfolio.”
e-fundresearch: „Please comment on the performance and risk parameters of your fund in the past year as well as over the past 3 and 4 years.”
Sulev Raik: „Our goal is relative outperformance and we measure the risks relative to the benchmark index. Tracking error guidance was set 5-10% when the fund was launched back in 2006. When it comes to performance then 2011 was not a good year for the fund. The fund was down in absolute terms and fell somewhat behind the benchmark. Over 3-4 years the fund has delivered decent relative return.”
e-fundresearch: „Did your fund outperform or underperform vs. benchmark over the past 5 years and which part could be linked to securities selection (Performance Attribution)?”
Sulev Raik: „The fund (ISIN: LU0273119544) has nicely outperformed the benchmark index over the past 5 years. Stock selection contributed approximately 65% and sector selection 35% to the outperformance.”
