TKB BNP comes top among Russian equity funds ex sector focus

TKB BNP Paribas Investment Partners has topped the year to date performance rating of Russian equity funds without a sector focus with its Promising Investments fund.

Over the first 10 months of the year the fund has made a record 18.58%, and three year performance is 62.07%, according to data from Investfunds.

This result lags only a few percentage points behind the absolute top performer among Russia’s equity funds, the Troika Dialog Consumer Sector fund, managed by Sberbank Asset Management (recently renamed from Troika Dialog following this year’s takeover). The consumer sector fund has made 21.43% year to date.

The second and third place, in absolute terms, have also been taken by sector focused funds, with Alfa Capital’s Global Finance fund achieving 20.38% and BFA Investment Company making 20.05% on consumer stocks.

The ranking results suggest that the consumer sector in Russia is the most profitable investment option. Its growth has recently received a boost as Russia joined the World Trade Organisation. The accession is expected to drive wage growth and with it purchasing power.

Kirill Bagachenko, a senior portfolio manager at TKB BNP Paribas, indentified the strategy that has helped the fund achieve its impressive performace.

“This year, the companies that have been rewarded are mostly those with a responsible approach to their commitment to business growth, such as E.ON Russia and Magnit, and those that have achieved a stable cash flow and distributed it to shareholders (Gazprom Neft, MTS and some privileged stocks of Surgutneftegaz, Tamneft and Bashneft),” he says.

“Economic giants such as Gazprom, RusHydro and VTB, have been out of favour with the market.

“Our bet on the first group of companies has allowed us to achieve such a good result. We welcome this shift in priorities among Russian market players and expect it to improve the ability of active managers to bring high returns.”

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