The Standard & Poor’s View

We’ve been taking a look at the S&P report that covers the Nevsky Capital Eastern European Fund. It makes for interesting reading and we thought that it might be useful to present some of the highlights here at Nevsky News, where they will be available to individuals and those looking to learn more.

Nevsky Capital Martin Taylor

The report was produced in August 2011 and the opinion offered in the report is dated July 2011. It begins by discussing the fact that the Nevsky team focuses on two funds, with the Eastern European Fund obviously being one of them. It’s remarked upon that there have been substantial inflows into the fund – meaning that more people were looking to invest in this fund. That will certainly have pleased Martin Taylor and Nick Barnes of Nevsky Capital, giving them more scope.

Nevsky Capital Nick Barnes

Indeed, it’s noted that the team had taken the decision to soft close the fund. At the time, the team consisted of two fund managers, two economists and no fewer than 6 sector-specific analysts. It’s to be expected that a substantial team would be required.

In general, between 25 and 40 holdings are reckoned to be held at any one time. S&P suggest that a very active approach is taken to management, with a concentration of time and effort on studying the fundamentals of countries, sectors and individual companies.

The fund is awared a AAA rating from S&P. What that means is that the fund is seen to demonstrate the highest measures of quality within its sector. This information is based upon the investment process, although this only tells part of the story.

There is also a view taken on the consistency of performance achieved by the management, with specific consideration given to how such levels of performance compare with other funds that operate with similar objectives.

Reading through the report, it’s clear that S&P have given the fund something of a “thumbs up”, but it’s clearly for each of us to observe and to research, prior to making investment decisions.

When you carry out your own research, you may regard such analysts’ reports as being part of the wider package of information that’s made available to you. They may be informative, or you may feel that they are simply to be ignored. That choice is very much your own, leaving you to make the right decisions for your own, personal circumstances.

Behind the scenes

When we look behind the scenes at any investment fund, we tend to find the full story. In truth, producing results is rarely the work of one or two individuals. The reality is that it would be difficult for such a small team to compile the amount of information that’s necessary to really judge the potential value offered by differing investments.

Nick Barnes Nevsky Capital

This means that it needs a group of real analysts to sit down and to look at specific countries, markets and companies. To begin with, it’s fair to say that this must involve a lot of graphs. For those of us who may not have been great at school, that probably doesn’t sound like a lot of fun!

Martin Taylor Nevsku Capital

That’s right, it means a lot of addition, subtraction, multiplication and division. Although there will certainly be computer programs available at Nevsky Capital to make such data transformations easier, the team led by Martin Taylor and Nick Barnes must still find themselves relying heavily on mental arithmetic in the first instance. That’s the way that many of us look to narrow down options.

Nick Barnes Nevsky Capital

It’s only once those initial, near-immediate, calculations have been carried out that we can seek to move on. That may well be the same for you, depending upon your own chosen role. Admittedly, you may not be focused on managing an investment fund, but it’s easy to see how the same rules might generally apply.

Nevsky Capital Martin Taylor

Ultimately, the team will be looking for signs that particular investments offer value. By the same token, they will be attempting to identify those that should be avoided. Using computer programs and algorithms will only take things so far. Beyond a certain point, it clearly becomes necessary to use the experience that must come from years of investing.

What can the rest of us learn by watching such teams in action? Although we may be investing on a smaller scale, it seems clear that we can also look to make informed decisions. That must be at the heart of all that we do.

Nevsky Capital – Eastern European Fund – February 2013

We take a look back at the performance of the Nevsky Capital Eastern European Fund during the course of February 2013. Regular updates of this nature are also available via the official Nevsky Capital website (https://www.nevskycapital.com) and are distributed via a variety of financial publications – both online and offline.

Overview

During February 2013, emerging markets were seen to under-perform global market. This particular region suffered more than most, partly due to the continuing uncertainty surrounding the Euro and oil prices, both of which slipped during the course of the month.

As a result of these conditions, the Fund fell by 3.2% over the month. This still reflects an over-performance of 0.5%, when compared to the peer-group average.

Individual markets

Given the spread of associated investments, the headline figures only tell part of the story. Of the markets that are represented, Turkey saw the best overall performance. When measured in US$ terms, there was a decrease in value of 1.6%.

When examining why Turkey performed more strongly than other markets, a number of factors can be identified:

  • There was a relative improvement in trade data.
  • There were continued portfolio inflows.
  • There were advantages as a result of the declining oil price.

The Fund may be seen as being slightly under-weight within Turkey, but investments in telecommunications and the financial sector have paid results here.

Russia was seen to under-perform, although individual stock picks once again brought benefits. In particular, telecoms holdings offered opportunities within the Russian market.

Financial facts

At present, cash stands at 5%. The total value of the fund is $598.6 million and the annualised rate of growth is 19.3%. The top 10 holdings include Gazprom, Sberbank, Rosneft and Novatek.

Martin Taylor of Nevsky Capital

Martin Taylor is one of the Fund Managers, helping to keep the Eastern European Fund on track. As can be seen, from the reports that we reproduce and analyse here at Nevsky Capital News, any fund can see increases and decreases in value.

To a certain extent, it can be said that the success or failure of any Fund Manager will be defined by the ability to out-perform direct competitors. Although the overall value may rise or fall, depending upon the performance of specific businesses, sectors and broader market sentiments, the key is to provide better returns than the alternatives.

When the overall value is falling, does it fall at a slower rate than competitors? That’s something that we are continually looking to observe. The same can be said to be true when thinking about rising prices: are things better than others? Or is a fund simply seeming to perform well due to a wider rise in stock market positioning. Is there, in other words, the opportunity to actually make more by investing elsewhere?

As might be expected, our own reports and reviews seek to answer such questions. It’s likely that you’ll have your own views here too.

Martin Taylor Photographs

Martin Taylor of Nevsky

 

Martin Taylor

 

Martin Taylor of Nevsky adjusts his tie

About Martin Taylor

The establishment of the Eastern European Fund has seen Martin oversee investments in a range of countries in central and Eastern Europe. Such investments, as carried out on behalf of Nevsky Capital, would clearly not be possible without a considerable degree of knowledge.

As with any investment fund, there’s a reliance on a dedicated team of analysts and specialists. There’s a need to understand what is going on within specific countries, industries and companies.

If a changing politicial environment within Russia, to take one example. means that opportunities are emerging there, then it’s clear that there are advantages associated with understanding that situation and seeking to move quickly. As with so much, it’s all about competitive advantages.

The ability to make the first move can often ensure better returns for investors. It can also be seen that this works in reverse, with the requirement to act quickly in order to reduce some holdings. This may come about as a result of changes within an individual industry.

Predicting such changes would simply not be possible, without having the dedicated team of experts that are available to Martin. As a result of this association, the Eastern European Fund undoubtedly aims to make investments that are sensible and should be cost-effective over time.

Here at Nevsky Capital News, we see part of our role as being to identify how well the fund is performing and also to bring you the critical facts. We follow up on releases and look to answer questions that you may have.

When you are pondering investment decisions, it’s clear that there is a necessity for you to carry out your research. When large sums of money are involved, you may (quite rightly) feel that there is little scope for error. With this background in mind, it’s so important that you should have the opportunity to review as much information as is feasible and possible at any point in time.