BSE charges past dozing fund managers
While the BUX index leaped 88% over the first five months of the year (69% in dollar terms, according to the Nomura Research Institute [NRI]), only three of the 37 regional and Hungary-specific funds tracked by Micropal Emerging Market Fund Monitor kept pace.
"I really didn't believe it would happen", said Robert Boukal, Vienna-based fund manager of the AS 151 million OstValor fund. OstValor, managed by Hypobank Austria, was up a mere 15.63% over the first five months of the year. "The bullish period in Hungary was totally unexpected."
In fact, just three managers outperformed the Hungarian market. Mercury's Eastern European Fund was up 95.58%; Vontobel Eastern Europe Equity Fund jumped 82.06%; and Fleming's Flagship Fund Eastern Europe climbed 73.18%, at the end of May.
OstValor has a mandate to split investments equally between fixed income and equities and, like many regional funds, its money has been spread across Central Europe during Hungary's meteoric rise.
"For the beginning of the bullish period, we were not weighted enough [toward Hungary] because we were afraid of the macroeconomic fundamentals," Boukal said, listing the budget deficit, current account deficit and relatively weak forint.
OstValor cut its Hungary weighting in mid-1995 from 20% to 10%, which is where it stood when the BSE took off in mid-December. The fund, caught off guard, readjusted its Hungarian portfolio in February to 22%. But it was too late. "We should have done it in December," Boukal said.
OstValor actually did better with investments in the Warsaw Stock Exchange (WSE), which were up 80% since January, compared to 60% for its Hungarian stocks.
Investors who spread their risk across Central Europe still made good money, but nothing compared to those who focused on the top BSE stocks, such as Inter-Európa Bank (up 190% over the first five months) and pharmaceutical companies Egis (145%) and Richter Gedeon (136%).
The Central European Stock Index (CESI) jumped 45% over the first five months, with Nomura's composite index of Eastern European stock exchanges, which adds Slovakia to the CESI's Hungary, Poland and the Czech Republic, up 35.5% in dollar terms. Regional fund managers, Micropal reported, averaged a 42.95% return. Twenty-one of the 37 surveyed outpaced NRI's regional index.
But even the better performing funds, such as ABN AMRO's DM 76 million Eastern Europe Equity Fund, regretted not buying more Hungarian stock.
"Yeah, of course," said fund manager Hendrik Vaandrager, who managed a 63.22% increase over the first five months of the year. "No doubt; but that's in hindsight."
"I really didn't believe it would happen", said Robert Boukal, Vienna-based fund manager of the AS 151 million OstValor fund. OstValor, managed by Hypobank Austria, was up a mere 15.63% over the first five months of the year. "The bullish period in Hungary was totally unexpected."
In fact, just three managers outperformed the Hungarian market. Mercury's Eastern European Fund was up 95.58%; Vontobel Eastern Europe Equity Fund jumped 82.06%; and Fleming's Flagship Fund Eastern Europe climbed 73.18%, at the end of May.
OstValor has a mandate to split investments equally between fixed income and equities and, like many regional funds, its money has been spread across Central Europe during Hungary's meteoric rise.
"For the beginning of the bullish period, we were not weighted enough [toward Hungary] because we were afraid of the macroeconomic fundamentals," Boukal said, listing the budget deficit, current account deficit and relatively weak forint.
OstValor cut its Hungary weighting in mid-1995 from 20% to 10%, which is where it stood when the BSE took off in mid-December. The fund, caught off guard, readjusted its Hungarian portfolio in February to 22%. But it was too late. "We should have done it in December," Boukal said.
OstValor actually did better with investments in the Warsaw Stock Exchange (WSE), which were up 80% since January, compared to 60% for its Hungarian stocks.
Investors who spread their risk across Central Europe still made good money, but nothing compared to those who focused on the top BSE stocks, such as Inter-Európa Bank (up 190% over the first five months) and pharmaceutical companies Egis (145%) and Richter Gedeon (136%).
The Central European Stock Index (CESI) jumped 45% over the first five months, with Nomura's composite index of Eastern European stock exchanges, which adds Slovakia to the CESI's Hungary, Poland and the Czech Republic, up 35.5% in dollar terms. Regional fund managers, Micropal reported, averaged a 42.95% return. Twenty-one of the 37 surveyed outpaced NRI's regional index.
But even the better performing funds, such as ABN AMRO's DM 76 million Eastern Europe Equity Fund, regretted not buying more Hungarian stock.
"Yeah, of course," said fund manager Hendrik Vaandrager, who managed a 63.22% increase over the first five months of the year. "No doubt; but that's in hindsight."
