Fund of the week: time to look Eastwards
The global economy is going through 1998 in reverse, Ange Zitkute tells the FT. Then, emerging markets were experiencing credit problems, now it’s the US. And that’s why now is as good a time as any to look East to invest, says Zitkute.
Banks in Turkey, Russia and even Georgia can offer respite from the subprime crisis, she says. With 41% of her Eastern European Trust (EST) devoted to financials, Zitkute has been making hay while the financial sectors have developed in those countries. The fund has achieved an impressive 150% return over the last three years.
The success of the Turkish economy in particular has been a real boon, leading Zitkute to raise her exposure to Turkish financials Isbank and Garanti Bank. These are still great opportunities in a market that remains only “half discovered” by general investors, she tells the FT.
But it’s Russia that really dominates the trust, with more than 60% of its holdings in the country. President Putin might not be the most savoury character in global politics, but “what’s bad for democracy is good for the country’s stability”. Consumption has taken off under his stewardship as a steady economy has given Russians the chance to earn and spend money.
Zitkute counts consumer-services outfit Sisterna and mobile-phone giant Mobile Telesystems among her top holdings. Trading at a 10.9% discount, the trust looks a good value way to get exposure to Eastern Europe.
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Eastern European Trust top ten holdings
Name of holding, % of assets
Sberbank of Russia, 11.8
Mobile Telesystems, 4.6
Unified Energy Systems of Russia, 4.2
Sistema JSFC, 3.3
Novatek OAO, 2.8
Turkiye Is Bankasi, 2.6
Bank of Georgia, 2.5
Comstar United Telesystem, 2.5
Enka Insaat, 2.4
IMB Group, 2.4
