Over the six month period ended 30th April 2015 JPMorgan Russian’s net asset value on a total return basis declined by 2.7% and the Company’s return to shareholders on a total return basis was a negative 2.2% over the period, which led to little change in the discount to net asset value at 14.1%. The performance in terms of return to shareholders on a total return basis was 3.7% below the benchmark, which ended the reporting period up 1.5%.
The manager points out though that the performance of the fund and the Russian market has been extremely volatile over this period, at one point being about 40% down.
The manager says negative performance was a result in part of the relative underperformance of a large holding in Magnit (retailer), and an underweight position in Alrosa (diamond mining), which outperformed significantly. Finally, the Company has no holding in VTB Bank, which also performed well. He says one of the reasons that the Company does not own VTB is because it almost became insolvent last year. Its strong performance is seen largely as a result of capital support recently provided by the Russian State.
Positive contributions arose from underweight positions in Rostelecom (fixed line telecoms), IBS / Luxoft (IT developers) a fast-growing export oriented company which benefitted from re-organisation and performed well last year and being underweight in the regulated utility sector, where Roshydro suffered badly from devaluation and the freeze of ruble tariffs.
JRS : Volatile period leaves JPMorgan Russian a bit behind its benchmark