Investment Philosophy

Karoll Capital’s Investment philosophy - The 5 Investment Pillars:

• Crisp focus on Emerging Europe

  We believe Emerging Europe offers excellent investment opportunities as the regional economies are set to grow faster that the Eurozone and given local stock exchanges' early stage of development. The positive market outlook combined with diminishing risk levels are starting to attract international investors to the region.

• Solid expertise and passion for emerging markets

  Our in-depth local knowledge and on-the-ground presence give us an edge in analyzing the economies and markets of Emerging Europe. All investment products are managed by seasoned investment specialists with solid capital markets expertise and a passion for Emerging Europe. Thanks to our location and excellent analytical capabilities we can access information quickly and easily as we regularly visit companies and events. Karoll Capital’s PMs are dedicated to constructing investment portfolios positioned to outperform regional benchmarks and peers.

• Long-term horizon for success

  At Karoll Capital we believe in taking a long-term view when making investment decisions. We expect Emerging Europe to continue to outperform the Eurozone in the long run due to the convergence processes related to income levels, household living standards, interest rates, etc. This conviction is reflected in our asset allocation and stock selection process, where the horizon of portfolio investment decisions is usually beyond 3 years. Likewise, our clients are aware of investments’ volatile nature, so normally have a long-term investment perspective.

• Disciplined investment process and flexible allocations

  Each of our investment products is managed by a separate Portfolio Manager. In making asset allocation decisions, the PM is supported by an eight-member Investment Committee. The team debates and decides on the asset classes comprising the portfolio, as well as the geographic and sector splits. The stock selection is performed by the fund’s PM with the help of a seasoned analyst team. Unlike most assets managers investing in the region, we have the freedom to deviate from local indices based on our views. This gives us flexibility in our investment choice, regularly leading to outperformance of benchmarks and peers. Ongoing risk management is essential to ensure excessive risk is avoided - our strategies’ volatility measures are consistently lower than those of benchmarks. Conducting monthly attribution analysis helps us determine to what degree performance is affected by country/sector/stock selection and quantify true alpha.

• In-house selection filters with focus on responsible investment

  We apply five layers of stock selection filters; 1.) market cap & liquidity; 2.) corp governance, transparency, ESG; 3.) sector outlook & company competitiveness; 4.) financial strength; 5.) in-house valuation.

  Because of market inefficiencies we believe Emerging Europe is abundant with mispriced assets. Our analysts possess native understanding of the region’s economies, companies, and market dynamics and use this in screening the broad investment universe to identify “hidden gems” through proprietary research. On-site company visits are a key part of research as well. In addition to employing valuation methods, we always consider investor psychology, liquidity and order flows. We focus on responsible investment and became the first local signatory of UN’s PRI.