BlackRock Emerging Europe’s results for the year ended 31 January 2015 show the impact of sanctions and the oil price fall on the Russian economy. The fund’s net asset value fell by 12.7% in total return terms. this better though that the equivalent 17.8% fall in the MSCI Emerging Europe 10-40 Index. A widening of the discount however, from 7.5% to 13.5%, meant that the return to shareholders was 18.4%.
The company was underweight Russia when the oil price fell and this helped the fund’s performance relative to the Index. The Managers had gone underweight anticipating, correctly, that the first ceasefire in the Ukraine wouldn’t hold. They rebuilt their positions in December, thinking that the worst was priced in, and have been rewarded in the current accounting year as Russian stock prices have started to appreciate again. The other country call they got right was to be overweight Turkey. Turkey is a net importer of oil and so has been a beneficiary of the collapse in the oil price.
A couple of stocks get a mention in the managers’ report. National Bank of Greece they have bought believing that Syriza would become mote pragmatic in their dealings with the EU and Dragon Oil which, since the year end, has received a bid approach from Emirates National Oil Company.
BEEP : BlackRock Emerging Europe gets its Russian call right