Download Karoll Capital Management is a licensed asset manager established

Monthly Factsheets | February 2017
UCITS-compliant mutual funds
Karoll Capital Management is a licensed asset manager
established in Sofia in 2003. With a clear focus on investing in
Emerging Europe, the firm has evolved into one of the most
progressive asset management boutiques in the region. We at
Karoll Capital Management take pride in our innovative
approach toward money management and product
development. In 2004 we pioneered the first stock mutual
fund in the country. We were the first to offer local clients
investment services abroad, and at the same time access of
international investors to the local market. In 2012 we became
the local partner of Schroders – one of the top global asset
managers.
The 5 Investment Pillars of Karoll Capital Management:
Crisp focus on Eastern Europe
We believe new Europe offers excellent investment
opportunities as the regional economies are set to grow faster
that the Eurozone and given local stock exchanges’ embryonic
stage of development. The positive market outlook combined
with diminishing risk levels are once again starting to attract
foreign investors to the region. While other Eastern European
funds tend to invest in companies based elsewhere that only
generate some of their revenues here, we focus solely on
stocks of companies operating in the region.
Solid expertise and passion for emerging markets
Our in-depth local knowledge and on-the-ground presence
give us an edge in analysing the economies and markets of
Eastern Europe. All investment products are managed by
seasoned investment specialists with solid capital markets
expertise and a passion for Emerging Europe. Thanks to our
location and excellent analytical capabilities we can access
information quickly and easily as we visit companies on a
regular basis. Karoll Capital’s portfolio managers are dedicated
to constructing investment portfolios positioned to outperform
regional benchmarks and peers.
Long-term horizon for success
At Karoll Capital Management we believe in taking a long-term
view when making investment decisions. We expect Eastern
Europe to continue to outperform the Eurozone in the long run
due to the convergence processes related to income levels,
household living standards, interest rates, etc. This conviction
is reflected in our asset allocation and stock selection process,
where the horizon of portfolio investment decisions is usually
beyond three years. Likewise, our clients are aware of
emerging market investments’ volatile nature in the short run,
so normally have a long-term investment perspective (at least
3 years).
Disciplined investment process and flexible
allocations
Each of our investment products is managed by a separate
Portfolio Manager. In making asset allocation decisions, the PM
is supported by a four-member Investment Committee. The
team debates and decides on the asset classes comprising the
portfolio, as well as the geographic and sector splits. The stock
selection is performed by the fund’s PM with the help of a
seasoned analyst team. Unlike most other assets managers
investing in the region, we have the freedom to deviate from
local indices based on our views. This gives us great flexibility
in our investment choice, regularly leading to superior results
and outperformance of benchmarks and peers. Meanwhile,
ongoing risk management is essential to ensure excessive risk
is avoided - our funds' risk measures are consistently lower
than those of benchmarks.
In-house valuations to ensure top picks
Because of market inefficiencies we believe Emerging Europe
is abundant with mispriced assets.
Our analysts possess solid experience in screening the broad
investment universe and identifying “hidden gems” through
proprietary research. In estimating the true value of an asset
we study the firm’s ability to realize an IRR greater than the
cost of capital, its shareholder structure and management
capabilities, sector dynamics and overall market position. Onsite company visits are a key part of research as well. In
addition to employing valuation methods, we always consider
investor psychology, liquidity and order flows.
ADVANCE INVEST
28 February 2017
Investment Objective
To seek long term capital appreciation through investments in stocks listed on the Bulgarian & Romanian markets. The fund is actively managed through bottom‐up selection of undervalued stocks
with high growth potential as determined by fundamental measures.
Fund Manager's Comment
Fund Facts
In February Advance Invest enjoyed support by Romania’s strong
performance, which is one of the best performers YTD, following an
unmemorable 2016. This happened against the background of the
protests in Bucharest, which achieved their goal and the controversial
text in the anti-corruption law - proposed by the Socialists - was
removed. The outcome was several resignations and a dramatic fall in
confidence in the government. In Bulgaria the election campaign for
the March elections is going at full speed. As usual it’s all about
strong populist promises aimed at the low income part of the
population and not taking into account the views of the business.
In February the market developments of portfolio components was
good. The Romanian BET continued its strong YTD performance,
extending its gains by 6%. Since the beginning of the year, the
Romanian market is one of the best performers globally with an
appreciation of 12.5%. The utilities sector joined the energy producers
in their solid uptrend. Another driving force were the positive
corporate reports, which restored investors’ interest.
For SOFIX the consolidation below important resistance levels (615625 zone) is still in effect. During the month the index posted a small
gain of 1.5%. YTD the market has advanced by 4.2% while
maintaining its bullish sentiment.
After an extremely successful January when Advance Invest achieved
a growth of 7.44%, a slower February followed - the fund gained
0.87%, extending its YTD return to 8.37%. Emerging Europe turned
out to be the best performer in the world last month, the main
benchmark MSCI EFM Europe + CIS ex RU jumsping 5.83%
(+8.52% YTD).
Fund type
Fund Manager
Fund size
NAV/share
Launch date
Benchmark
Currency of account
Subscription fee
Management fee
Redemption fee
Minimum investment
open-end
Georgi Georgiev
BGN 5.59 M
BGN 1.2067
10/05/2004
MSCI EFM Europe + CIS ex RU
BGN (1EUR = BGN 1.95583)
up to 1.50%
2.5 % NAV p.a.
none
none
Codes
ISIN
BSE Ticker
Код в Bloomberg
BG9000014134
5AZ
ADVIMFD BU
Market Breakdown
Romaniа
33.6%
Bulgaria
59.6%
Fund performance vs Benchmark
450
400
Other
0.0%
Cash
6.7%
350
300
250
Advance Invest
Sector Breakdown
Benchmark
200
Other
150
Utilities
100
Cash
50
Banks
0
30.04.2004 31.10.2006 30.04.2009 31.10.2011 30.04.2014 31.10.2016
Industrials
Fund Results
1 month
1 year
Year to Date
Since Launch (annualized)
Fund
0.87%
27.05%
8.37%
1.48%
Benchmark
5.83%
12.31%
8.52%
2.65%
Fund
10.02%
-6.26%
5.61%
18.95%
-5.02%
-17.02%
-11.73%
2.20%
-66.57%
55.37%
31.20%
32.60%
Benchmark
-1.29%
-22.13%
2.24%
-16.81%
34.08%
-29.75%
16.29%
51.49%
-56.45%
20.71%
9.97%
51.04%
Annual Performance
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
Energy
Financials and real estate
20.4%
5.7%
6.7%
7.8%
11.9%
13.3%
15.9%
Holdings
5 Largest Holdings
ACTIV PROPERTIES (Bulgaria ), Financials and real estate
CEZ (Bulgaria ), Energy
MONBAT AD(Bulgaria ), Industrials
CHIMIMPORT AD (Bulgaria ), Holdings
FONDUL PROPRIETATEA SA (Romaniа ), Holdings
18.4%
ADVANCE EASTERN EUROPE
28 February 2017
Investment Objective
The goal of the fund is to ensure high investment results in the long‐term by investing in Eastern European equities in 7 regional markets.
Fund Manager's Comment
Most of the markets from Central and Eastern Europe finished the month higher. Russia
however was on the retreat as MICEX lost nearly 9% of its value in February after very
sound performance in 2016. At the same time however the Russian ruble appreciated by 3.8%
against the US dollar in the past month and thus the USD denominated RTS index fell by
5.6%. Therefore MSCI MSCI EFM Europe+CIS declined slightly (-0.16%) while the
benchmark excluding Russia advanced by 5.8%.
Among the markets from the portfolio of Advance Eastern Europe the largest gains were
posted by Ukraine (+8%) and Romania (+6%). After comparatively weak performance in
2016, the Romanian market starts the year on a strong footing as the return on the major
index BET for the first two months is more than 12%. The Romanian economy is on a fast
track as data published in February showed that Romania was the country with the highest
GDP growth in the European Union in the last quarter of 2016 (+4.8% as compared to the
same period of 2015).
The Croatian market continued to rise further, CROBEX gaining another 3.7% in February,
while the Bulgarian index SOFIX advanced by 1.5%.
After significant volatility in 2016, the Turkish market has seen comparative stability since
the beginning of the year. BIST 100 has jumped by 12% during the first two months of 2017,
the major part of the gains being posted in January while in February the index gained 1.4%.
At the same time the Turkish lira was much stronger in February as it jumped by 5% against
the USD dollar. The increased geo-political risks in front of the country however result in
significant pressure on the lira in the past months. The Turkish lira has lost 2.5% against the
US dollar YTD while its 2016 loss amounts to more than 15%.
Fund Facts
Fund type
Fund Manager
open-end
Nadia Nedelcheva, CFA
Fund size
NAV/share
Launch date
Benchmark*
Benchmark**
Currency of account
Subscription fee
Management fee
Redemption fee
Minimum investment
EUR 3.25 M
EUR 0.8048
04.10.2006
MSCI EFM Europe&CIS
MSCI EFM Europe + CIS ex RU
Euro
up to 1.50%
2.5 % NAV p.a.
none
none
Codes
ISIN
Bloomberg Code
BG9000016063
ADVEAEU.BU
Market Breakdown
Russia
36.8%
In February the fund’s units appreciated by 1.17% performing better than the benchmark with
Russia and below the one excluding it mainly due to the high weight and strong performance
of the Polish market, to which the fund has not exposure in accordance with its strategy.
Serbiа
5.4%
Fund Performance
170
150
Turkey
12.1%
Romaniа
11.6%
130
Advance Eastern
Europe
110
Benchmark*
90
Ukraine
5.0%
Croatia
6.0%
Benchmark**
Bulgaria
12.9%
70
50
30
04.10.2006
Cash
10.0%
Sector Breakdown
Other
04.10.2009
04.10.2012
04.10.2015
Fund Results
1 month
1 year
Year to Date
Since Launch (annualized)
Fund
1.17%
21.94%
3.35%
-2.06%
Benchmark*
-0.16%
27.06%
-0.64%
-4.19%
Benchmark**
5.83%
12.31%
8.52%
-3.85%
4.1%
Information services
4.3%
Construction
4.5%
Energy
4.8%
Materials
5.8%
Retail
5.9%
Industrials
6.1%
Holdings
6.3%
Banks
Cash
Annual Performance
29.9%
Healthcare
Oil and gas
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
Other
0.2%
8.9%
9.5%
10.0%
TOP 5 HOLDINGS
Fund
11.31%
-2.29%
-4.06%
6.64%
4.07%
-17.02%
18.44%
36.50%
-61.94%
25.91%
Benchmark*
24.40%
-8.32%
-22.21%
-11.15%
4.86%
-22.53%
21.65%
73.42%
-66.63%
11.54%
Benchmark**
-1.29%
-22.13%
2.24%
-16.81%
34.08%
-29.75%
16.29%
51.49%
-56.45%
20.71%
GMK Norliski Nikel (Russia ), Materials
X5 Retail Group N.V.(Russia ), Retail
JSC "NOVATEK", Common (Russia ), Oil and gas
Lukoil (common) (Russia ), Oil and gas
ALROSA PAO (Russia ), Non-ferrous metals
ADVANCE EMERGING EUROPE OPPORTUNITIES
28 February 2017
Investment Objective
The Fund invests in stocks of companies in the CEE region, and has a short-term holding horizon of the investments.
Fund Manager's Comment
Fund Facts
The region of Central and Eastern Europe continued to post strong performance as a
whole in February with the pace of advance of MSCI EFM Europe + CIS ex RU
accelerating as the benchmark climbed 5.83% for the month. Thus its return YTD
amounts to 8.52%, significantly above the results of the benchmark excluding Russia
due to the weak performance of the Russian market since the beginning of 2017.
The markets from the portfolio of Advance Emerging Europe Opportunities were a
mixed bag, the top performer being Poland again as its positive trend accelerated
further in February. The Polish index WIG20 jumped by 6.5% in the past month and
thus its year-to-date return was above 12% by the end of February. Data published in
February disclosed that Poland’s economic growth is accelerating as its GDP
advanced by 3.1% y-o-y in the last quarter of 2016, which was among the highest
growth rates in the European Union.
The other markets did not change much in value with the performance of the
Hungarian market weighing down on the monthly results of the fund. After posting
solid gains in 2016 when the BUX index jumped by more than 30%, the beginning of
the year has not been as strong for the Hungarian market as it depreciated by 1.3% in
February. The Baltic markets were almost flat in the past month. The Czech market
which finished 2016 lower (-3.6%), has been posting better results since the beginning
of 2017 with the PX index advancing by 2.3% in February.
The fund’s units appreciated by 1.76% in February, retaining the much better
performance compared to the benchmark one year back, as well as since the launch of
the fund.
Fund type
Fund Manager
Fund size
NAV/share
Launch date
Currency of account
Subscription fee
Management fee
Redemption fee
Minimum investment
Benchmark
open-end
Nadia Nedelcheva, CFA
EUR 1.56 M
EUR 0.9296
23.11.2007
Euro
up to 1.50%
2.5 % NAV p.a.
none
none
MSCI EFM Europe + CIS ex RU
Codes
ISIN
Bloomberg Code
BG9000023077
ADVIPOF.BU
Market Breakdown
Poland
40.7%
Lithuania
2.0%
Fund Performance
110
Hungary
12.1%
100
Estonia
8.2%
90
80
Czech
13.7%
70
MF AEEO
60
Cash
11.4%
Bulgaria
1.1%
Benchmark
Austria
8.4%
Other
2.4%
50
Sector Breakdown
40
30
26.11.2007
OTHER
Financials
26.11.2009
26.11.2011
26.11.2013
26.11.2015
Media
Fund Results
1 month
1 year
Year to Date
Since Launch (annualized)
Fund
1.76%
22.90%
7.18%
-0.78%
Benchmark
5.83%
12.31%
8.52%
-6.76%
4.76%
Metallurgy
4.87%
Retail
5.15%
Healthcare
5.41%
Furniture
Oil and gas
Information services
Banks
2016
2015
2014
2013
2012
2011
2010
2009
2008
4.28%
Entertainment
Cash
Annual Performance
25.26%
3.66%
5.84%
7.60%
8.78%
11.43%
12.97%
5 Largest Holdings
Fund
7.26%
-2.27%
-16.68%
3.47%
17.55%
-23.26%
21.98%
2.85%
-15.88%
Benchmark
-1.29%
-22.13%
-22.13%
2.24%
-16.81%
34.08%
-29.75%
16.29%
51.49%
KRUK S.A. (Poland ), Financials
CD PROJEKT SA (Poland ), Information services
OTP BANK (Hungary), Banks
ANY SECURITY PRINTING GO (Hungary), Printing
TALLINNA KAUBAMAJA GRUPP AS (Estonia), Retail
How to invest in our UCITS-compliant mutual
funds?
Karoll Capital Management manages four UCITS-compliant
mutual funds focused on emerging Europe:
Advance Invest – invests in listed companies in
Bulgaria & Romania.
Advance Eastern Europe – invests in stocks of
companies in 6 selected markets - Bulgaria, Romania,
Serbia, Croatia, Russia and Ukraine.
Advance Emerging Europe Opportunities
invests in stocks of companies in CEE.
–
Advance Conservative Fund – invests primarily in
local bank deposits and fixed income instruments.
How to buy and redeem fund units
All funds are UCITS-IV compliant. The Fund’s NAV is calculated
every business day by 5 pm local time.
In order to subscribe or redeem Advance funds units, please
send us an enquiry at [email protected]
or fax at +359 (2) 4008426, and we will revert back with
specific trading instructions.
To facilitate the process of executing and settling the
transactions, please provide us with the details of your local
sub-custodian, if available.
Fund Management Company
Karoll Capital Management. The company holds a full license
for fund and portfolio management services.
Karoll Capital Management
1 Zlatovrah Str.
Sofia, Bulgaria
Tel: +359 (2) 4008 300
Fax: +359 (2) 4008 426
Email: [email protected]
www.karollcapital.bg
Funds structure – All Advance funds are UCITS-IV compliant
Fund custody and administration - Eurobank EFG Bulgaria
for Advance Invest and Advance Conservative Fund; UniCredit
Bulbank for Advance Eastern Europe and Advance IPO Fund
Auditor – Grant Thornton Ltd, www.gtbulgaria.com
Regulator – Financial Supervision Commission, Bulgaria
www.fsc.bg
Dealing – The funds are open for trading every business day
with cut-off at 5 PM Bulgarian time (4 PM CET). Subscriptions
and redemptions accepted in BGN and EUR.
Settlement – Settlement takes place as delivery against
payment (DVP) within two days, either in BGN or EUR.
Register of units – The units of all Advance UCITS compliant
funds are registered electronically with the Bulgarian Central
Depository.
Custody banks details
Advance Invest - Eurobank EFG Bulgaria, SWIFT: BPBIBGSF
Advance Eastern Europe - Unicredit Bulbank, SWIFT:
UNCRBGSF
Advance Emerging Europe Opportunities - Unicredit Bulbank,
SWIFT: UNCRBGSF
Advance Conservative Fund - Eurobank EFG Bulgaria, SWIFT:
BPBIBGSF
Some custody banks that safe-keep Advance funds
The following banks have opened direct sub-custody accounts
in Bulgaria: Citibank, Citco Global Custody, Bank Austria
Creditanstalt, Credit Suisse Securities, Deutsche Bank, Erste
Bank, HSBC, ING, Raiffeisen, Societe Generale, etc.
Legal Disclaimer
The historical results of the mutual funds do not guarantee future results. The value of the investment and the income from it can increase as well as
decrease. Profits are not guaranteed and there is a risk that investors may not receive the full amount of the invested funds. Investments in the mutual
funds are not guaranteed by a state guarantee fund or any other institution. This material has been prepared by Karoll Capital Management, a licensed
asset management company, a member of the Bulgarian Association of Asset Management Companies (BAAMC). It has been approved by the Compliance
department at Karoll Capital Management. The prospectuses, KIIDs and Rules of the funds are publicly
available at all offices of Karoll Capital Management as well as at www.karollcapital.bg.