BLACKROCK EMERGING EUROPE
YOU may well think of Europe as part of the developed world, but there are plenty of countries on its periphery whose economies have yet to flourish and where tricky political issues such as censorship and street protests are rife.
This fund invests in what is called emerging Europe — predominantly Russia, Poland, Hungary, Turkey and Ukraine — and seeks to make money from its hoped for growth.
Investors’ interest in these regions is low and confidence in the markets is poor. That might sound off-putting, but it means shares are cheap and, should they recover, there are potentially big profits to be made.
But you need a strong stomach. This fund has seen huge peaks and troughs this year alone. If you had invested three months ago, your money would have grown by an impressive 23 pc. But if you had invested six months ago, you would have lost money.
WHO RUNS IT?
DAVID REID, 32, comanaging with Sam Vecht. Mr Reid joined the team in April 2013. He studied aerospace engineering at Bath University and started his working life designing robotics at a defence company. He later landed an internship with investment bank Merrill Lynch, and joined Black Rock in 2005.
WHO IS HE?
MR REID lives in Oxshott, Surrey, with his wife and a cat — he’d prefer to have a dog, but he can’t because he and his wife are at work all day.
The alarm goes off at 5.30am on a weekday and he’s on a train to London an hour later. The early start is important because of the time difference in the countries he invests in.
He prefers to skip breakfast and instead drinks only a cup of tea once behind his City desk by 7.30am.
Living in Surrey is important because of its proximity to airports. He travels to visit companies at least once every couple of months.
But it’s also a beautiful place to live, he says. ‘We’re surrounded by heaths and woodland, and we go mountain biking or walking and often end up in the local pub for lunch.’
HOW £1,000 INVESTMENT HAS PERFORMED OVER . . .
ONE YEAR £1,063 THREE YEAR £860 FIVE YEAR £1,644
THE INSIDE SCOOP
INVESTING in emerging Europe is a long-term bet — at least ten years — where you must be happy to sit through volatile performance.
Russia alone has caused investors a major headache. While its actions in Ukraine caused markets to tumble, growth is regularly crimped by political meddling, fears of corruption, complicated trading rules and a dependence on oil and commodities.
Also, there isn’t a glut of businesses to choose from in these markets.
In fact, the fund invests in only 25. So, if one suffers badly, it has a major impact on the fund. Its largest holdings include Russian bank Sberbank and Gazprom energy.
On the upside, the dirt cheap shares mean scope for spectacular gains when the going gets good.