Investment funds downgrade WSE

The nation's drifting economy and restricted access to equity markets are drowning emerging market fund managers compelled to stock pick on the WSE. A two-speed equity investment market is emerging, led by strong performances in Russia, while other countries in the region, including Poland, are lagging.
The Warsaw-based $6.8 million Pioneer Service Sector Investment Fund achieved minus 12.72% returns for the year ended Oct. 25, the second worst performer among Eastern European and Russian equity funds, according to a Lipper survey. Most of the 10 poorest performers' portfolios were comprised of Eastern European and WSE-listed companies, such as F&C Polish Investment Company (-3.89%) and MSCI Poland Opals
(-2.83%).

"The Warsaw Stock Exchange is not a good idea," said Paweł Wilkowiecki, co-manager of Pioneer Service Sector Investment Fund and Pioneer Aggressive Investment Fund, a €50.8 million Poland-focused portfolio, which returned minus 1.95%.
The dearth of investment opportunities and overall poor performance on WSE throttles fund managers' key tools for beating stock picking and asset allocation shifts, Wilkowiecki said. The WSE's equity options for his service sector fund are particularly few, he added.
"Most companies in the sector and on the WSE are not liquid investments," he said.
In Russia, fund managers have exploited the benefits that high oil prices have had on equity markets. Prosperity Capital Management's Russian Prosperity Fund, for instance, recorded 75.25% gains for year ended Oct. 25.
But here, Polish investors' hands are tied by a stagnant economy and an underutilised stock exchange.
"Investing is a very interesting task," Wilkowiecki said. "There are only 10-15 companies with liquidity enough to make changes to your portfolio."