Funds for Eastern Europe

By THIS IS MONEY
Updated:

 

I'm thinking of investing around £1,000 in as Isa in the emerging markets of Central or Eastern Europe. I lived there for some time and have seen the positive changes afoot. I know some companies have specific funds for this area but can you tell me the best option at the moment? AS, Glasgow

Warren Perry from Churchill Investments replies: Indeed, there are many changes afoot in the Central European and former Soviet states, much of it extremely positive, particularly with EU convergence.

I have spent some time in some of these countries and recently returned from a brief visit to each of the so-called 'Baltic Tigers' of Latvia, Lithuania and Estonia, where I can confirm that economic growth is very strong.

Investing in the countries directly is quite difficult and you have correctly identified that the best way to access the area is via a collective fund that has the ability to invest across the whole of the region.

There are two funds that particularly stand out as having demonstrated commendable performance, but my favourite is Jupiter Emerging European Opportunities, managed by Elena Shaftan.

The Fund's investment policy is to invest primarily in companies which operate or reside in Central or Eastern Europe including Russia, the Baltic States, all other member states of the former USSR and Turkey as well as Israel, Uzbekistan, Turkmenistan, Tajikistan and Kyrgystan. The fund is primarily invested in Russia currently, though does have exposure to Hungary, Poland and Austria.

Any investment in such a fund though should come with a 'wealth warning'. Whilst performance has been strong over the past few years, there are bound to be pitfalls along the way as these economies and societies emerge and develop after years of Communist rule. Accordingly, not only should any investment be regarded as longer term, but it has to be accepted that some volatility will be experienced. After all, it was only 1998 when Russia defaulted on its debt and devalued the ruble by 35%.

However, longer term, I believe this to be one of the most exciting areas to invest in. I will certainly be returning to the region on a regular basis.

USEFUL LINKS
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