TKB BNP Paribas’ Russian equity funds beat peers again in Q3

Equity funds managed by TKB BNP Paribas Investment Partners in Russia has been doing well this year. They keep topping the fund rankings put together by mutual fund information platform Investfunds.

At the end of Q3, three of its funds made the three top positions in the local mutual fund rankings among funds without a sector specialisation.

The trio – the Premium equity fund, Equity fund 2 and Promising investments – have made 18.36%, 16.95% and 15.65% in the first quarter, respectively.

They were beaten only by two oil and energy focused funds, one of which was also offered by TKB BNP Paribas (Russian oil), the other one being Alfa Capital’s energy fund.

The two top performers last quarter only beat the premium equity fund by a fraction. Alfa Capital’s fund, the absolute leader in the rankings, made 18.87% in Q3.

TKB BNP’s funds have been doing well all year. In July, Investfunds ranked four of its equity investment products top of all Russian equity mutual funds based on seven month performance.

Year to date, some of its top performing funds, such as Prospective investments and Premium equity funds, have made between 23% and 25%, beating the MICEX index six-fold. Year to date, the MICEX is up a mere 4%.

Vladimir Tsuprov, chief investment officer, said: “Last quarter we were able to employ both our fundamental investment ideas, such as overweighting dividend stocks, and tactical ideas, when managers took short-term bets on market inefficiencies.

“Now that the local economy has started to slow down and Russian equities have stopped being so undervalued, the effective management of a company has increasingly more impact on the price of its equities.”

Tsuprov noted that TKB BNP’s funds investing across the equity universe are making money this year. Apart from funds with a general focus, specific industry funds are also looking rather attractive year to date.

The Russian oil fund, for example, has made 74.6% over three years, taking top place among all funds investing in the sector.

The Russian power fund has also beaten all other funds in the sector year to date and for Q3, making over 3% and 17% for those periods, respectively.

When investing in equities, TKB BNP Paribas looks for firms that pay regular dividends to investors for stable returns – something that is not as common on the Russian market as it is in developed countries.

Instead of chasing growth, the firm’s approach is to “either invest in companies that are not growing, but paying dividends, or, if they are growing, it must be at a reasonable price.”

“It is not our objective to be the best performers on the market for a short period of time – we want to bring consistent good performance compared to our peers,” says Tsuprov.

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