"We are rather absolute return oriented fund - the aim is to make [b]consistently 15-20% [b/] over many years to come. And I can promise that this fund will be much less correlated with target stock markets than other funds. "
This was written by Romanas 18/05/07
And 7 months later:
If you open OMX Fund page you will see that Alfa performance is [b]in line with other funds investing in the same region.[b/] During the last 6 months all CEE funds have fallen by 20-30%, and Alfa certainly is not the worst. I will not name whose Fund has performed the worst, it would be unethical from my side, but you can see it for yourself.
Juhul kui ma omaksin investeeringuid antud fondis, siis ma tunneks end küll räigelt petetuna ja jalaga näkku saanuna. Klientidele eksitava informatsiooni andmine on minu hinnangul üks hullemaid asju, mida teha. Nii et jah, viisakam oleks olnud reklaamida tavalist KIE fondi mitte imelugu kaasa rääkida, sest nüüdseks on ju paljudel usaldus kadunud.
RomanasB!
When trying to atract inestors, there is very rarely used arguments like: we are in line with other funds. :o)
When trying to atract inestors, there is very rarely used arguments like: we are in line with other funds. :o)
[offtopic]
muudame nime ära ja kõik on korras: LHV Langeva Euroopa Alfa Fond :D
[/offtopic]
Bows, täpsustaks: pigem LHV Langeva Euroopa High Beta Fond.
teen oma fondi: CharlieFond :D
I believe that next best asset class is lottery tickets. I'm putting all my money in there!
See esimene katsetus teha fondi, mis kommertspankade fondidest erineks läks küll aia taha.
Aga miks ei võik LHV tõesti praegusel närvilisel ajal Eestis pioneerina asutada näiteks turuneutraalne hedge fund. Praegusel ajal oleks potensiaalseid kliente küll, iseasi kui palju vabu ja võimekaid fondijuhte sellele jaguks?
Aga miks ei võik LHV tõesti praegusel närvilisel ajal Eestis pioneerina asutada näiteks turuneutraalne hedge fund. Praegusel ajal oleks potensiaalseid kliente küll, iseasi kui palju vabu ja võimekaid fondijuhte sellele jaguks?
enamasti on nn "turuneutraalsus" häbematu klientidele näkku valetamine, mis mingis komplitseeritumas olukorras kuidagi enam nii ei tööta. Aga mõningaid hedge-fondi elemente saab sisaldama/sisaldab alates sellest aastast minu juhitava Kawe Investeerimisfondi tegevus.
martinhold
It's excellent idea!
But I'm afraid, shorting lottery tickets in Baltic States or EU needs some kind of goverment or EU commission permissions, though...
It's excellent idea!
But I'm afraid, shorting lottery tickets in Baltic States or EU needs some kind of goverment or EU commission permissions, though...
Hi, everybody!
I will not answer all of you one by one - questions are overlapping, but just clarify the Fund's position on several points. The fund as it is stated in founding documents is an all-equity fund, which means at any given moment is at least 75% invested into equity. So just selling all the stocks and sitting on the cash is explicitly prohibited by the rules of the Fund. Our job is to give you exposure to the region, and it is up to investor to decide - when do you want this exposure and when you don't. Market is inherently volatile and no one knows precisely when the market turns, lest after the fact - so trying to "jump-in, jump-out" may lead in the end to higher trading cost and no additional performance. There is a substantial body of evidence, scientific studies that demonstrate that active time-speculating is losing money over longer term.
Now regarding Alfa in the name - the Fund is hand-picking stocks in the region. We do not invest on the base of Top-10 of biggest capitalisation companies in every single country as majority of our competitor do. We really believe in every single investment in our portfolio. When investment is not meeting the goals (financial performance, not the stock behaviour) - we dispose that investment.
The lower correlation with other funds will be evident over longer period and it is certain to appear as we have different investment philosophy. Many CEE funds are basically "Russia" funds with some small number or CEE companies added. And exposure to Russia is a bet on ever-growing oil prices. Our team does not believe that oil prices will rise over long term from current level, that is why we on purpose did not include any commodity stocks. However, in the times of general panick as we have seen in the last two weeks correlation breaks down and almost all markets of the world fall simultaneously. When stocks are falling from Shaghai to New York no amount of stock picking can prevent the fund from falling. There were several days recently when basically anything in the region has fallen almost 5% without any regard for industry, country or exposure to export markets.
Now regarding the return. Stocks are not bank deposit where interest is slowly but surely accruing every day. They are volatile by their nature. We stated that our aim is consistent 15-20% return over many years and we still stay by this aim. The fund was started in May last year only, so I would kindly suggest that judging of the results is a bit premature at this stage as even one year of operation is not over. We did not promise you that the Fund would not have price volatility - it is impossible to promise such thing.
Best regards
I will not answer all of you one by one - questions are overlapping, but just clarify the Fund's position on several points. The fund as it is stated in founding documents is an all-equity fund, which means at any given moment is at least 75% invested into equity. So just selling all the stocks and sitting on the cash is explicitly prohibited by the rules of the Fund. Our job is to give you exposure to the region, and it is up to investor to decide - when do you want this exposure and when you don't. Market is inherently volatile and no one knows precisely when the market turns, lest after the fact - so trying to "jump-in, jump-out" may lead in the end to higher trading cost and no additional performance. There is a substantial body of evidence, scientific studies that demonstrate that active time-speculating is losing money over longer term.
Now regarding Alfa in the name - the Fund is hand-picking stocks in the region. We do not invest on the base of Top-10 of biggest capitalisation companies in every single country as majority of our competitor do. We really believe in every single investment in our portfolio. When investment is not meeting the goals (financial performance, not the stock behaviour) - we dispose that investment.
The lower correlation with other funds will be evident over longer period and it is certain to appear as we have different investment philosophy. Many CEE funds are basically "Russia" funds with some small number or CEE companies added. And exposure to Russia is a bet on ever-growing oil prices. Our team does not believe that oil prices will rise over long term from current level, that is why we on purpose did not include any commodity stocks. However, in the times of general panick as we have seen in the last two weeks correlation breaks down and almost all markets of the world fall simultaneously. When stocks are falling from Shaghai to New York no amount of stock picking can prevent the fund from falling. There were several days recently when basically anything in the region has fallen almost 5% without any regard for industry, country or exposure to export markets.
Now regarding the return. Stocks are not bank deposit where interest is slowly but surely accruing every day. They are volatile by their nature. We stated that our aim is consistent 15-20% return over many years and we still stay by this aim. The fund was started in May last year only, so I would kindly suggest that judging of the results is a bit premature at this stage as even one year of operation is not over. We did not promise you that the Fund would not have price volatility - it is impossible to promise such thing.
Best regards
Romanas,
I think you just shot yourself in the foot.
I do agree fully with your first point of being fully invested (though I'd say fully means 90%+, not 75%) and therefore doing what your clients have mandated you to do.
However, your idea of creating alpha is more than amusing. Let me argue a bit:
1) "We do not invest on the base of Top-10 of biggest capitalisation companies in every single country as majority of our competitor do."
--> So, you're not investing in blue chips but rather going for small and mid caps. This doesn't mean alpha generation, just different exposure. SEB, Trigon, Avaron have new europe small cap funds. Or whom did you consider your competitors again?
2) "Many CEE funds are basically "Russia" funds with some small number or CEE companies added."
--> Unless you consider yourself to be in the league with Tempelton, Citi, Morgan Stanley or the likes, you really haven't done your homework at all. Hansa, SEB, Trigon, Avaron all have ex-Russia funds. East Capital is the only one who has any meaningful sales locally who has Russia in their CEE fund.
3) Moreover, explaining the markets and sell-off impact on your fund, you completely and entirelly dismiss your own statement from May 07:
"We are rather absolute return oriented fund - the aim is to make consistently 15-20% over many years to come. And I can promise that this fund will be much less correlated with target stock markets than other funds."
____________________
So, you're offering low beta, ex-Russia, ex-oil, small and midcap exposure. If I knew how to have a small/mid cap fund with low beta, absolute return and significant alpha, I wouldn't have to work again in this life.
If I recall it right, you didn't have a benchmark for your fund. This serves often a good purpose - noone can figure how you're really doing or whether you're creating any alpha at all.
If one wasn't worried about the fund outlook before, they probably are after reading your explanation note.
I think you just shot yourself in the foot.
I do agree fully with your first point of being fully invested (though I'd say fully means 90%+, not 75%) and therefore doing what your clients have mandated you to do.
However, your idea of creating alpha is more than amusing. Let me argue a bit:
1) "We do not invest on the base of Top-10 of biggest capitalisation companies in every single country as majority of our competitor do."
--> So, you're not investing in blue chips but rather going for small and mid caps. This doesn't mean alpha generation, just different exposure. SEB, Trigon, Avaron have new europe small cap funds. Or whom did you consider your competitors again?
2) "Many CEE funds are basically "Russia" funds with some small number or CEE companies added."
--> Unless you consider yourself to be in the league with Tempelton, Citi, Morgan Stanley or the likes, you really haven't done your homework at all. Hansa, SEB, Trigon, Avaron all have ex-Russia funds. East Capital is the only one who has any meaningful sales locally who has Russia in their CEE fund.
3) Moreover, explaining the markets and sell-off impact on your fund, you completely and entirelly dismiss your own statement from May 07:
"We are rather absolute return oriented fund - the aim is to make consistently 15-20% over many years to come. And I can promise that this fund will be much less correlated with target stock markets than other funds."
____________________
So, you're offering low beta, ex-Russia, ex-oil, small and midcap exposure. If I knew how to have a small/mid cap fund with low beta, absolute return and significant alpha, I wouldn't have to work again in this life.
If I recall it right, you didn't have a benchmark for your fund. This serves often a good purpose - noone can figure how you're really doing or whether you're creating any alpha at all.
If one wasn't worried about the fund outlook before, they probably are after reading your explanation note.
ehk teisisõnu see, mida Blink Romanasele selgitab siin, lk. 2.
Blink, miks nii kurjalt. Päris raske on ju paremat vastust välja mõelda
Blink - it is rather amusing that you, being an insider of the industry, post on LHV's forum pretending to be a lay man. Why don't you first disclose your employer so that anyone could see motivation of your attacks ad hominem?
hmm... tekkis endalgi huvi, kuhu organisatsiooni blink kuulub?
Vabamüürlased?
Romanas,
How exactly is it relevant whether or not I'm from the industry? I just challenged your statements as any person could do if they are somewhat familiar with investing. But keeping conversation on the point, what did I say that wouldn't hold? My points were briefly the following:
1) I think it is a good idea to be fully invested.
2) I think that avoiding one country and/or one industry doesn't create alpha per se. It just offers different exposure.
3) You attack your competition, saying they're mostly Russian funds with some CEE picks. I think this is just wrong and I point to the facts.
4) You accused your competitors in taking just "top 10 holdings by mcap from each country". I think this is also just wrong. Anyone can pull out Hansa, SEB or any other funds portfolios or at least their top holdings and have a look.
5) I compared your statements of being an absolute return fund at times and regional equity fund at other. I think you could have done a better job explaining when did that change.
By no means did I try to attack your performance. In fact, I have absolutely no idea how this has been and I haven't had a look. I assume you're down 25% or slightly less from the top, depending on how quickly you got invested after the launch. Which would be just fine and in line with all other regional funds. It is also all natural and fine if the fund hasn't created much alpha. Most funds don't. But I disagree with confusing the definitions for one's own benefit.
All in all, I think you shouldn't look for personal or institutional attack behind my post. Giving it a thought now, it would make very little difference for your competition even if they were to share all the money in your fund between them. Which they obviously are not going to do.
I would appreciate some comments from 'competition'. Do they see my points being valid or does it look like a competitor pulling a chair without a reason.
How exactly is it relevant whether or not I'm from the industry? I just challenged your statements as any person could do if they are somewhat familiar with investing. But keeping conversation on the point, what did I say that wouldn't hold? My points were briefly the following:
1) I think it is a good idea to be fully invested.
2) I think that avoiding one country and/or one industry doesn't create alpha per se. It just offers different exposure.
3) You attack your competition, saying they're mostly Russian funds with some CEE picks. I think this is just wrong and I point to the facts.
4) You accused your competitors in taking just "top 10 holdings by mcap from each country". I think this is also just wrong. Anyone can pull out Hansa, SEB or any other funds portfolios or at least their top holdings and have a look.
5) I compared your statements of being an absolute return fund at times and regional equity fund at other. I think you could have done a better job explaining when did that change.
By no means did I try to attack your performance. In fact, I have absolutely no idea how this has been and I haven't had a look. I assume you're down 25% or slightly less from the top, depending on how quickly you got invested after the launch. Which would be just fine and in line with all other regional funds. It is also all natural and fine if the fund hasn't created much alpha. Most funds don't. But I disagree with confusing the definitions for one's own benefit.
All in all, I think you shouldn't look for personal or institutional attack behind my post. Giving it a thought now, it would make very little difference for your competition even if they were to share all the money in your fund between them. Which they obviously are not going to do.
I would appreciate some comments from 'competition'. Do they see my points being valid or does it look like a competitor pulling a chair without a reason.
Blink - it is not a court-room and you are not an attorney, so please tone down your musings. The fact that you work for LHV's competitor is very relevant for this discussion as all your statements since the Fund was launched were hostile and had the only aim - to disrepute the newly launched Fund. Be brave enough to recognise the facts. I can easily disprove every single statement of yours, but again - this is not a competition in rhetoric and eloquence. For example your last but one post:
>>> So, you're not investing in blue chips but rather going for small and mid caps.
Yes, I have never said that we don't invest in blue chips. All I said was - " We do not invest on the base of Top-10 of biggest capitalisation companies in every single country as majority of our competitor do." This statement obviously means that our criteria go much further beyond capitalization charts. If company from Top-10 satisfies our own internal criteria - then we invest in it, just belonging or not to Top-10 has no significance whatsoever for our team. This exactly is "alfa generation" - picking companies individually on their own merit, not just because they are what everybody is investing in. Hence, your comment on "small cap funds" has no relevance for Alfa as we are not "a small cap fund".
>>> Hansa, SEB, Trigon, Avaron all have ex-Russia funds.
Miss again. We are not "ex-Russia" fund, we have Russian companies in our portfolio. I am afraid it is you who has not done your homework. In order to attack and criticize anything make sure you study at least pie charts of the Fund, from which you would learn that we are exposed to Russia at the glance. Differently from many our competitors we disclose a lot of information about the Fund on monthly basis - so study carefully before you make sweeping statement about competitor's products.
best regards
>>> So, you're not investing in blue chips but rather going for small and mid caps.
Yes, I have never said that we don't invest in blue chips. All I said was - " We do not invest on the base of Top-10 of biggest capitalisation companies in every single country as majority of our competitor do." This statement obviously means that our criteria go much further beyond capitalization charts. If company from Top-10 satisfies our own internal criteria - then we invest in it, just belonging or not to Top-10 has no significance whatsoever for our team. This exactly is "alfa generation" - picking companies individually on their own merit, not just because they are what everybody is investing in. Hence, your comment on "small cap funds" has no relevance for Alfa as we are not "a small cap fund".
>>> Hansa, SEB, Trigon, Avaron all have ex-Russia funds.
Miss again. We are not "ex-Russia" fund, we have Russian companies in our portfolio. I am afraid it is you who has not done your homework. In order to attack and criticize anything make sure you study at least pie charts of the Fund, from which you would learn that we are exposed to Russia at the glance. Differently from many our competitors we disclose a lot of information about the Fund on monthly basis - so study carefully before you make sweeping statement about competitor's products.
best regards
Man, I just love the Polish exposure. What's the average P/E on this position? :)
I won't go to arguing detailed statements explicitly, but from "person somewhat familiar with investing's" point of view, I would support Blink this time.
I do believe that LHV Alfa is a valuable fund in the investing products market as one more tool to take a position in some vision; however, I also would like to argue that calling it Alfa is too much, and even misleading.
From investors' point of view, as I see, Alfa should be something giving an edge over the other funds, and market - something like options market making for Gild Arbitrage, investing outside stock market, being 100% flexible in switching regions, industries, long/short, but being fully invested in specific region in specific market is just a specialized fund not depending on the outlook the fund managers may foresee. In these conditions, the performance would anyway roughly follow the regional stock performance, and it doesn't really matter if the correlation is bit below or above the average of similar funds. Luckily, the investors have the option not to invest, and since the promise did not seem believable for me personally, I decided not to invest. But even then I prefer then fund would be called "Rising Europe Retail and Banking fund", or something like that, not to mislead other investors.
Besides that, I also see the controversy that if it was initially said that the target is absolute return, then it is unfair to compare it with funds that in your own words "differ a lot for Alfa fund".
D: not related to any funds, or have any position in CEE funds except for pension funds, and maybe I miss (a lot of) homework, but an average investor who has to choose between funds does not do much homework anyway.
I do believe that LHV Alfa is a valuable fund in the investing products market as one more tool to take a position in some vision; however, I also would like to argue that calling it Alfa is too much, and even misleading.
From investors' point of view, as I see, Alfa should be something giving an edge over the other funds, and market - something like options market making for Gild Arbitrage, investing outside stock market, being 100% flexible in switching regions, industries, long/short, but being fully invested in specific region in specific market is just a specialized fund not depending on the outlook the fund managers may foresee. In these conditions, the performance would anyway roughly follow the regional stock performance, and it doesn't really matter if the correlation is bit below or above the average of similar funds. Luckily, the investors have the option not to invest, and since the promise did not seem believable for me personally, I decided not to invest. But even then I prefer then fund would be called "Rising Europe Retail and Banking fund", or something like that, not to mislead other investors.
Besides that, I also see the controversy that if it was initially said that the target is absolute return, then it is unfair to compare it with funds that in your own words "differ a lot for Alfa fund".
D: not related to any funds, or have any position in CEE funds except for pension funds, and maybe I miss (a lot of) homework, but an average investor who has to choose between funds does not do much homework anyway.