OREANDA-NEWS. Renaissance Asset Managers (RAM), the leading emerging and frontier markets investment manager, announces that its Ottoman Fund recently won a fourth consecutive €uro am Sonntag award for its top performance in the Eastern Europe Equity Funds category. The recognition is given by the prestigious €uro magazine and rewards the top funds available in Germany.

Renasset Ottoman Fund portfolio manager Aziz Unan received three 2013 awards: 1st position in the five-year category; 2nd position in the three-year category, and 1st in the one-year. The fund was also first in the five-year category last year.

The fund, which also celebrated its seven-year anniversary in January, has returned 6.0%[1] so far this year, after delivering a 41.2% gain in 2012. This performance contrasts with the challenging Eastern European markets, which have suffered from the protracted economic slowdown in Western Europe since the outbreak of the financial crisis. The MSCI EM Europe 10/40 Net TR (EUR) index gained 25.5% in 2012, underperforming the fund.

Portfolio manager Aziz Unan said: “Eastern Europe has been overlooked by investors concerned about the effects of the crisis in Europe, so they have been unable to pick the undervalued and well-managed companies that we have identified. Opportunities can be found in a variety of countries and sectors – they are not concentrated.”

Using a proprietary database, Aziz’s disciplined, bottom-up approach covers a universe of c.200 companies in the Turkish, Russian, Eastern European and Middle Eastern markets. This quantitative process is followed by visits to corporate management to assess the long-term sustainability of any investment.

This unconstrained stock-picking method selected Sberbank, Russia’s largest lender, whose shares have gained 14.1% so far this year, whilst the country’s leading RTS index has gained 2.4% over the same period. Aziz selected the stock on the back of its profitability and affordable price.[2]

Aziz also invested in Turkish petrochemicals company Petkim, after Renaissance’s in-house Eastern Europe team spotted potential significant savings in the business’ input costs. After disciplined, in-depth research, Aziz identified the situation and built the position, which at present accounts for 2.5% of the fund – sizeable enough to lift the overall portfolio performance. The shares, overlooked by benchmarks and rival managers, have leapt 25% since the purchase. We believe that the stock still offers up-side potential, given the change in the company’s overall costs.

Other Turkish stocks have also helped drive the portfolio’s performance. Vakif Bank, for instance - one of the fund’s top holdings since 2012 - has gained 17.8% in 2013, after almost doubling last year, following a turnaround in profits that was also envisioned by our fund manager.

[1] As at 18 February 2013. Source: Bloomberg, A (retail) share class, performance calculated NAV to NAV, in euro, total return, net of fees, excluding any initial charge. Past performance is not indicative of future returns. The Renasset Ottoman Fund was previously known at the Renaissance Ottoman Fund.

[2] Source: Bloomberg, as at 18 February 2013