Emerging market specialist Charlemagne Capital is putting its rubles where its mouth is. The firm is forecasting a bull run for the Russian equity market this year and has increased its OCCO Eastern European Fund’s gross exposure to the country to 103%, a record high for the fund, representing 59% of total gross exposure.
"Current market conditions lend themselves very well to our bottom-up investment process, with markets seemingly more valuation conscious,” said Andrew Wiles, the fund’s portfolio manager. “This supports our confidence in increasing risk levels in the Fund via an increase in gross exposure as opposed to adjusted net market exposure. We continue to see major inefficiencies across Eastern Europe and Russia providing the opportunity for generating alpha."
Year-to-date, the fund has returned 8.17% through March , while the Eurekahedge Eastern Europe and Russia Hedge Fund Index, rose 6.48%, with more than twice the volatility, according to the firm.
The fund's “star performer” in March on the long side was Wimm Bill Dann, a producer of dairy and juice products in Russia and the CIS, whose shares rose by 26.2% following well-received 2006 financial results. IMSG, the Russian-based and London-listed advertising company also enjoyed an 18.8% rally in its share price. Both have contributed to the fund's recent strong performance, according to the firm.
The OCCO Eastern European Fund, a non-directional long/short vehicle, was the first hedge fund launched by Charlemagne Capital in December 2001. It managed US$168.2 million as of the end of March, is currently open to new investors and will close again once it reaches its targeted capacity of US$220 million.
It charges a 1.5% management fee and 20% performance fee, with a US$100,000 minimum investment requirement.