TKB BNP’s Russian utilities fund top performer in July

TKB BNP Paribas Investment Partners’ Russian utilities fund has achieved top performance last month among all open-ended mutual funds in Russia, according to Investfunds’ July rankings.

For the month of July the fund is up 10%. Interestingly, second place was taken by Troika Dialog’s utility fund, which is up 8.69% for the same period.

Ruslan Muchipov, analyst at TKB BNP Paribas, attributes last month’s success to the three top holdings in the fund – E.ON Russia, MRSK of Center-Volga and MRSK of Center, which together hold over 40% of the fund’s assets.

Yet this success of Russian utility funds is short-lived and not necessarily a reason to invest.

The performance of the TKB BNP fund has been up and down since inception in 2003 and is down 3.1% year to date and 30.4% over the last 12 months. Troika’s fund has lost 9.63% YTD and 21.44% in the last 12 months.

Vladimir Tsuprov, chief investment officer, TKB BNP, said the utility sector was difficult to invest in, because it remains heavily controlled by the government. Reforms are taking place, but they are often slow and inefficient.

Aivaras Abromavicius (pictured), partner at East Capital, agrees. Although he sees compelling opportunities in consumer focused sectors of the Russian economy due to the growth in consumer spending, utilities are not on his list of favourites.

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