march 2007fim emerging europe1 investing in emerging europe according to fim fonds professionell...

March 2007FIM Emerging Europe 1

Investing in Emerging Europe according to FIM

Fonds Professionell Messe, Wien

Raoul Konnos, Fund ManagerFIM Emerging Europe

March 2007

1.1.2006Document Footer 2

Introduction of FIM

FIM Group

FIM Emerging market funds

Our investment process


FIM Group in a nutshell

• Established in 1987 as a brokerage, asset management since 1994

• AUM (Dec. 2006) EUR3,0bn

• 2006 turnover EUR82m (+30%), EBIT 19m (flat Y/Y), 284 employees

• Apart from Finland FIM has offices in Stockholm and Moscow

• Icelandic Glitnir bank made a tender offer on FIM in February 2007


FIM Emerging markets funds

• Forerunner in emerging markets fund products in Finland, AUM in emerging market funds total currently EUR750m

• First Russian fund introduced in Finland (1998)

• Focus on Eastern Europe (comprising of Russia, Russia Small Cap, Emerging Europe and Ukraine funds)

• Total of 10 emerging market funds currently, including funds for all BRIC-countries


This is FIM Emerging Markets

Team work

Speed from ideas into action

Tracking error

Small and Mid-Caps

Benchmark

Company visits

Scepticism

ESSENTIAL

FAST

HIGH

YES

EXISTS

VITAL

HEALTHY


FIM EM Investment Strategy

CORE HOLDINGS

PREFERENCE FOR DOMESTIC PLAYS VS. EXPORT SECTORS*

• To get local, not global exposure• Higher pricing power/profitability• Consumption growth • Infrastructure investments

INTERACTION

* Since inception of funds

GLOBAL TRENDS

• Regional generalists global sector views

• What sectors will perform, what should be avoided

SHORTER/MEDIUM TERM OPPORTUNITIES

• Global sectors demand/supply balance

• Local conditions

STOCK SELECTION

• Company visits, industry analysis• Regulation, pricing power,

structural changes• Valuation, liquidity• Management track, strategy

WE DO NOT WANT TO EXCLUDEANY OPPORTUNITIES

• Case by case analysis rather than mechanical screening

• Tactical aspects, M&A• Small Caps + non-benchmark stocks

– keeping in mind the liquidity

ACTIVENESS

• Ability to fast action• High individual responsibility rather

than consensus committees• Dynamic and enthusiastic team

open for new ideas

SHORTER TERM HOLDINGS


FIM EM Investment Process

COMPANY AND ANALYST MEETINGS

IDENTIFYINVESTMENT THEMES

IDENTIFYSET OFCOMPANIES

RANK THECOMPANIES

EVALUATEINVESTABILITYRISKS

INVEST

• Market position• Valuation• Earnings quality/

sustainability

• The exposure of each sector/company to the trend

• Growth dynamics• LT pricing power• Profit momentum• What areas to avoid?

• Liquidity• Corporate

governance

• Timing - short term price development

• Price impact

PARALLEL VALIDITY CHECK/SEARCH FOR NEW IDEAS

CHALLENGEINVESTMENT THEMES

CHALLENGE THE CON-FIDENCE

CHALLENGE RANKING/VALUATION

EXIT/REPLACE WITH NEW THEMES

• Still valid?• Still significant?• Any better ideas?

• Story coming to an end?

• Need for sector rotation?

• Adjust company positions?

1.1.2006Document Footer 8

FIM Emerging Europe fund

A balanced approach on Emerging Europe


Fund facts

• Launch date 4th October 2004

• Fund manager Raoul Konnos, since inception

• Annualised return +32,9% since inception

• AUM EUR52m (1 March 2007)

• Investment area: new EU countries and EU applicants

• Long-only equity fund


Strong growth outlook in the entire investment area

Läh

de:

ING

0

5 000

10 000

15 000

20 000

25 000

0 1 2 3 4 5 6 7 8 9 10

GDP growth 2007e in %

GD

P/c

apit

a in

US

D (

PPP) Latvia

Hungary

Czech Rep.

Croatia

Turkey

Romania

LithuaniaEstonia


12M forward looking P/E ratios for fund’s main markets and Russia

- 60 %

- 40 %

- 20 %

0 %

20 %

40 %

60 %

01 J anuary 2003 01 J anuary 2004 01 J anuary 2005 01 J anuary 2006 01 J anuary 2007

Rela

tive t

o E

uro

STO

XX

Czech Poland Hungary Russia Turkey EMEA


Small cap exposure only on selected markets

I nvestment strategy Poland Turkey Hungary Czech Balkans* Baltics* *

Large X X X XMid & Small Caps X X X

* Romania, Bulgaria, Croatia** Estonia, Latvia, Lithuania


Short-term outlook

• Spring correction has happened every year in last seven years

• Poland had become the leader among Eastern European countries with regard to nr. of listed companies and share liquidity

• Turkey will suffer from twin elections this year, although the valuations partly already reflect this

• The fund focus is on Poland, Romania and the Baltics


Geographical focus on Poland, the Baltic countries and Balkans

FI M Emerging EuropeGeographical breakdown

Poland29 %

Turkey11 %

Hungary & Czech15 %

Balkans15 %

Baltics14 %

Other & cash16 %

BenchmarkGeographical breakdown

Poland30 %

Turkey30 %

Czech20 %

Hungary20 %


Sector focus on private consumption demand, including banking, consumer goods and construction

FIM Emerging EuropeSector breakdown

Banks32 %

Investment companies

11 %Consumer goods

& services24 %

Refining & utilities

2 %

Construction & real estate

14 %

Telecom9 %

Other8 %

BenchmarkSector breakdown

Banks44 %

Consumer goods & services

11 %

Refining & utilities22 %

Metal5 %

Telecom15 %

Construction & real estate

3 %


Fund performance since inception (4 Oct. 2004)

9,0

11,0

13,0

15,0

17,0

19,0

21,0

23,0

25,0

10.04 1.05 4.05 7.05 10.05 1.06 4.06 7.06 10.06 1.07

Emerging Europe WIG (30 % ), PX (20 % ), BUX (20 % ) ja ISE 100 (30 % )


CV, Raoul Konnos, fund manager

• 13 years of capital markets experience

• Joined FIM AM in July 2004 and started FIM EE mutual fund on 4 October 2004

• Previous 8 years at premium Nordic broker D. Carnegie (in Helsinki) in various positions (Head of research, Equity research & sales)

• BBA (University of Stockholm, Sweden), CEFA (Swedish School of Economics, Helsinki)

march 2007fim emerging europe1 investing in emerging europe according to fim fonds professionell...

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