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Karoll Capital’s Emerging Europe Funds Ranked Highest by Return in 2017

Investments in Emerging Europe will be the winning choice in the new year, according to the asset manager’s experts


Karoll Capital’s mutual funds focused on Eastern Europe took the first two places by annual return among Bulgarian-domiciled funds in 2017. The two UCITS funds were the only local ones with above 20% yield for the past year. Advance Invest MF ranks as #1 among all 120 local funds with a +21.17% return, while Advance Emerging Europe Opportunities is second with a gain of +20.6%, according to the Bulgarian Association of Management Companies (BAAMC). The two funds are also in the Top 10 for 2017 among all global peers investing in the region of Emerging Europe.


Advance Invest MF, which targets shares listed in Bulgaria & Romania, took advantage of the stock markets’ rally, boosted by the strong growth of the economies of the two Balkan states. The Fund managed to outperform all of its peers as well as the major equity indices in Bulgaria and Romania.


"The past year can be best described as the year of positive expectations and positive outcomes," says Tihomir Kaundzhiev, PM of Advance Invest MF.  "The main benchmark of BSE-Sofia, the SOFIX index, ended the year with a gain of over 15%.  The Romanian BET index advanced by 9.4%. Romania registered 8.6% annual economic growth in the third quarter of 2017, while Bulgaria’s GDP increased by 3.9% for the same period ", adds Tihomir.  Currently, the economic environment in both countries is stable, according to Karoll Capital's experts, which is a prerequisite for better corporate results.


Advance Emerging Europe Opportunities Fund - investing mainly in Central Europe and the Baltics - also benefited from excellent macroeconomic trends and solid corporate performance.


Karoll Capital’s portfolio managers expect the dynamic growth and sound investment opportunities in the region to continue into 2018. "The countries of Central & Eastern Europe continue to outpace developed Europe. At the same time, despite the appreciation, valuation ratios remain low, both historically and compared to other markets. We expect the good macroeconomic prospects and the tangible growth of the stock exchanges in the past year to attract more and more investors," says Nadia Nedelcheva, PM of Advance Emerging Europe Opportunities Fund.


The opinion of Karoll Capital's analysts, who have over 15 years of experience on average, is that the potential of Emerging Europe is very strong. The latter is backed by the fact that despite the recent growth, markets in these countries are still far below their 2007 levels, while most other global markets have seen new highs. Furthermore, Eastern Europe has a twice higher GDP growth than developed Europe:  for the period 2006 - 2016, the average annual growth rate was +3.9% against +0.9% for the euro area. Labor costs remain very low compared to Western Europe, which is why more and more companies are relocating to the region. This in turn leads to a decline in unemployment rates and rise in wages, which is a driver of stronger personal consumption growth. Meanwhile, the region is the main beneficiary of EU funds, further supporting the investment activity.

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