The World's #1 Russian, Ukrainian & Eastern European Discussion & Information Forum - RUA!

This Is the Premier Discussion Forum on the Net for Information and Discussion about Russia, Ukraine, Eastern Europe and the Former Soviet Union. Discuss Culture, Politics, Travelling, Language, International Relationships and More. Chat with Travellers, Locals, Residents and Expats. Ask and Answer Questions about Travel, Culture, Relationships, Applying for Visas, Translators, Interpreters, and More. Give Advice, Read Trip Reports, Share Experiences and Make Friends.

Author Topic: ING Russia Fund  (Read 5878 times)

0 Members and 1 Guest are viewing this topic.

Offline shakespear

  • Supporting Member
  • Member
  • *
  • Posts: 8136
  • Country: us
  • Gender: Male
  • Status: Just Looking
  • Trips: 20+
ING Russia Fund
« on: January 29, 2009, 12:59:33 PM »
ING provides a Semi-Annual ( April 30) and Annual October 31) report on the activity of their family of mutual funds.  The discussion on their Russia Fund may be of interest to some.  Here is the report from 10-31-2008:

FYI:

Fund Value:  June 2, 2008:  $75.68 per share
Fund Value:  January 28, 2009:  $12.31 per share

PORTFOLIO SPECIFICS:

The Russian equity market recovered in the second half of 2007 when it became clear that the Presidential elections of December would not change the leadership of the country.  President Putin named Dmitry Medvedev as his successor, while he assumed the position of Prime Minister.  The last few months of 2007 were particularly strong months for Russian equities, because of both falling political risk and the strengthening risk appetite in global markets.

In January 2008, equities came down as inflation fears increased, wiping out much of the gains in the last quarter of 2007.  The Russian market recovered again in May, and even reached a new historic high on the back of corporate tax cuts for Russia's ailing energy sector.  Then, in a bid to reduce inflationary pressures, the government told several large companies to desist from raising prices for consumers.  Steel maker Mechel OAO was the main victim of this increasing state interference. 

The war with Georgia created more doubts about the Russian investment climate, as relations with the west deteriorated sharply.  Since the summer, Russian equities have fallen faster that other emerging markets.  The main concern has been the dire state of the Russian financial sector, which has suffered deeply from the global credit crisis. 

The Fund's underweight in the energy sector helped in the first part of the fiscal year but detracted from results for the fiscal year as a whole.  The domestic demand-related stocks performed well, as investment and consumption growth reached record-high levels.  The energy sector was not able to benefit from rising oil prices , as high taxes and the strong ruble affected corporate profitability.  In the last few months of the period, Fund performance benefited from our preference for large cap stocks and defensive sectors such as telecom and consumer staples.     

On a stock level, Pharmastandard was among the biggest contributors to the performance.  Pharmastandard, a generic pharmaceutical producer, was a good relative performer thanks to the defensive nature of its sector and the increasing healthcare spending in Russia. 

CURRENT OUTLOOK AND STRATEGY:

For the next few quarters, investors will focus on the banking system and the government's attempts to bring confidence back.  It would be good news if the authorities would use the current crisis situation to force a serious consolidation in the banking sector.  In our opinion, if regulation is tightened at the same time, the system could come out of this crisis stronger than it was before.  We believe it probably will take quarters, or perhaps years, before confidence is restored and credit growth starts recovering.  One of the risks that could put the equity market under more pressure in coming months or quarters is a possible ruble devaluation.  So far, the Russian authorities have been able to keep the ruble stable relative to the basket of euros and dollars they use as a reference point.  But after having spent more than 20% of total foreign exchange reserves in only a few months time, it is becoming increasingly unlikely that this strategy is sustainable.  A cheaper ruble would help to prevent balance of payment problems at a later stage, but it would also lead to more inflationary pressure. 

 
"If you obey all the rules, you miss all the fun" - Katharine Hepburn

Offline shakespear

  • Supporting Member
  • Member
  • *
  • Posts: 8136
  • Country: us
  • Gender: Male
  • Status: Just Looking
  • Trips: 20+
Re: ING Russia Fund
« Reply #1 on: August 03, 2009, 09:38:29 PM »
ING provides a Semi-Annual ( April 30) and Annual (October 31) report on the activity of their family of mutual funds.  The discussion on their Russia Fund may be of interest to some.  Here is the report from 4-30-2009:

FYI:

Fund Value:  June 2, 2008:  $75.68 per share
Fund Value:  January 28, 2009:  $12.31 per share (down 83.73%)
Fund Value:  August 3, 2009:  $23.95 per share (up 94.56%)

PORTFOLIO SPECIFICS:

Russian equities were one of the wildest roller coaster rides amongst global equity markets in the last six months.  After losing more than three quarters of its value (from peak to trough) the Russian market endured particularly volatile action in late 2008 and early 2009 - including three double-diget percentage point rallies - before the RTS Index reached its low point of 498 on January 23, 2009 after falling from almost 2,500 at its peak in May 2008.  From its low point, the RTS had risen more than 66% by the end of the period. 

The Fund's underperformance for the reporting period was due to stock selection primarily in the materials and utilities sectors.  Toward the end of 2008, it seemed that Russia needed to allow its currency to devalue.  We saw this as an opportunity to increase Fund exposure to export sectors.  The Fund added to its positions in the energy sector and selectively to materials, which hurt results for the period. 

Stock selection among energy and financial sectors contributed to results.  Despite the poor outlook for the ruble at the time, the Fund did not sell out its domestic exposure.  We believed the companies that the fund holds would be in a position to gain from the economic difficulty by acquiring weaker competitors.

Between November 2008 and February 2009 the rouble lost a third of its value against its dual currency trading basket (55% US dollar and 45% Euro) while the Central Bank of Russia follwed its course of gradual currency weakening.  Despite the negative impact it was to have on the Central Bank's foreign currency reserves, the authorities did not believe they could handle the potential political fallout of a sudden devaluation, as happened in 1998.  For better or worse, this was the first example of successful, gradual currency depreciation in emerging markets history.

While the Fund kept a cautious stance toward the financial sector throughout the period, it made only moderate changes to other sectors and trading activity was light.  The domestic stocks the Fund held generally benefited performance.  Discount food retailer Magnit OAO was the biggest contributor - the stock was among the Fund's largest overweight positions during the period. 

As oil prices have risen, there has been a return of risk appetite among global investors and riskier assets have outperformed less-risky assets.  This has helped Russia, seen as a riskier equity market than most of it's emerging market peers.  Within Russia, it has helped stocks of highly leveraged companies relative to their less-leveraged peers. 

CURRENT OUTLOOK AND STRATEGY:

We have a balanced outlook on the Russian market.  In our opinion, the external environment is positive with risk appetite, and commodity prices having recently turned up from depressed levels.  Even following the sharp recovery since January lows, we believe Russian equity valuations, in general, remain attractive relative to their own history and their emerging market peers.  From these levels however, the valuation in itself is not likely to act as a significant further catalyst for a short term re-rating without a corresponding increase in underlying earnings.  In the meantime, Russia's economy continues to face headwinds such as inflation, rising unemployment and contreacting industrial output.  It is difficult to build a case for significant improvement in corporate earnings in the near term; over the long term, however, there remains significant potential for corporate earnings improvements. 

We are paying particular attention to developments in the materials and financials sectors, where we think significant balance sheet and cyclical risk remains.  Elsewhere, the Fund sticks to its key, stock-level over-weights, where we see better quality balance sheets, management teams, corporate governance and earnings visibility.
"If you obey all the rules, you miss all the fun" - Katharine Hepburn

Offline shakespear

  • Supporting Member
  • Member
  • *
  • Posts: 8136
  • Country: us
  • Gender: Male
  • Status: Just Looking
  • Trips: 20+
Re: ING Russia Fund
« Reply #2 on: February 09, 2010, 09:43:47 AM »
ING provides a Semi-Annual ( April 30) and Annual (October 31) report on the activity of their family of mutual funds.  The discussion on their Russia Fund (LETRX) may be of interest to some.  Here is the report from 10-31-2009:

FYI:

Fund Value:  June 2, 2008:  $75.68 per share
Fund Value:  January 28, 2009:  $12.31 per share (down 83.73%)
Fund Value:  August 3, 2009:  $23.95 per share (up 94.56%)
Fund Value:  February 8, 2010:  $30.87 per share (up 28.89%)

PORTFOLIO SPECIFICS:

Earlier this year Russian equities were priced for disaster, with many market participants expecting a collapse in the ruble and widespread corporate bankruptcies.  As the global economic recovery has taken hold and markets have become unstuck, a number of global and local factors have worked together to push Russian equities up from their depressed levels.  Historically low interest rates and large economic stimulus packages have created a global surge in liquidity.  This has pushed risk appetite higher as investors seek out higher yielding assets.  With the risk trade back on, those investors who have fled towards U.S. dollar assets during the crisis have moved the other way; this has weakened the dollar and supported risky assets such as commodities and emerging market currencies and equities.  The Russian equity market, which is heavily reliant on commodities and perceived as a high-risk investment, has been benefiting from all these factors.  

On top of the global environment, local factors have played a role in the revaluation of Russian stocks, including state support for various sectors, widespread corporate debt restructuring and falling interest rates made possible by decreasing inflationary pressures.  In such an environment, the stocks that have performed the best have been those perceived as the most risky, among them a number of stocks that the market was previously pricing for bankruptcy.

The Fund benefited from the recovery by holding a combination of large cap stocks, which have benefited from global money flowing into the Russian market; and smaller riskier companies that had too much risk priced in.  In terms of relative performance the Fund has benefited from its overweight in the small and mid cap space while it suffered due to the underweight in the financial sector - Russian bank stocks were benefiting from global inflows while the Fund managers were not yet comfortable with the underlying fundamentals and maintained an underweight position in this sector.

The Fund's best relative performance contributors at the stock level were LSR Group, Bank of St. Petersburg, TMK Pipe and Magnit, while the worst detractors were VTB Bank and Sberbank.  

CURRENT OUTLOOK AND STRATEGY:

After such a strong market performance and rebound in earnings expectations, we believe Russian valuation levels are no longer as attractive as they were earlier this year; however, we believe they remain attractive compared to their global emerging market peers and their peak levels of 2007 and 2008.  If the environment of strong global liquidity and high appetite for risk persists, we believe it is likely that the Russian market will generally continue to outperform global emerging peers and developed markets.  We are acutely aware, however that any swing in the external environment is likely to put pressure on Russian equities.  We therefore are closely monitoring the news flow on the global economic environment, inflation expectations and interest rates.  

Besides the global or external angle, we believe the Fund is positioned to benefit from a number of domestic themes, including infrastructure spending, domestic consumption recovery, liberalizing of markets and increasing economic links with China.  The Fund continues to underweight the energy sector (dominated by large cap, blue chip stocks) in favor of domestic sectors, particularly utilities, real estate and consumer sectors.  The Fund's positioning in Russian banks is currently neutral.  
"If you obey all the rules, you miss all the fun" - Katharine Hepburn


Offline Bruce

  • Member
  • Posts: 49
  • Gender: Male
Re: ING Russia Fund
« Reply #3 on: February 14, 2010, 06:29:47 AM »
Why not RSX?    Risky but loss and returns mirror the ING fund with much lower costs.
SOMETIMES DESPITE ALL OBSTACLES, WITH EFFORT, YOU GET IT RIGHT!

Offline shakespear

  • Supporting Member
  • Member
  • *
  • Posts: 8136
  • Country: us
  • Gender: Male
  • Status: Just Looking
  • Trips: 20+
Re: ING Russia Fund
« Reply #4 on: February 14, 2010, 09:28:33 AM »
Why not RSX?    Risky but loss and returns mirror the ING fund with much lower costs.


Usually, I try to avoid closed-end mutual funds. 

I've owned LETRX since 1998 back when it was a no-load fund called Lexington Troika Dialog Fund.  The fund has been bought and purchased by several companies since then, each of them grandfathering my ability to purchase additional shares of the fund at no-load.

Please remember, in publishing these reviews, it is not my purpose to solicit investors for LETRX.  My purpose is to provide a general overview of the Russian stock market. 
"If you obey all the rules, you miss all the fun" - Katharine Hepburn

Offline Clanholmes

  • Member
  • Posts: 15
Re: ING Russia Fund
« Reply #5 on: May 05, 2010, 06:19:04 PM »
You can look at ADRs from Russia also. They mirror the shares in Russia, but trade in USD.


Offline shakespear

  • Supporting Member
  • Member
  • *
  • Posts: 8136
  • Country: us
  • Gender: Male
  • Status: Just Looking
  • Trips: 20+
Re: ING Russia Fund
« Reply #6 on: July 24, 2010, 07:00:16 PM »
ING provides a Semi-Annual ( April 30) and Annual (October 31) report on the activity of their family of mutual funds. The discussion on their Russia Fund (LETRX) may be of interest to some. Here is the report from 04-30-2010:

FYI:

Fund Value:  June 2, 2008:  $75.68 per share
Fund Value:  January 28, 2009:  $12.31 per share (down 83.73%)
Fund Value:  August 3, 2009:  $23.95 per share (up 94.56%)
Fund Value:  February 8, 2010:  $30.87 per share (up 28.89%)
Fund Value:  July 23, 2010:  $33.44 per share (up 8.33%)

PORTFOLIO SPECIFICS:

The last reporting period saw continuation of the global economic recovery.  Growth estimates increased, money found its way back into the asset markets and investors were rewarded.  Along with an improved global growth scenario came higher commodity prices: crude oil rose from the mid $60s per barrel to the upper $80s, which was favorable for commodity producers such as Russia.  Russia's riskiness worked in its favor at a time of increased risk appetite - Russian equities returned around 16% in U.S. dollar terms against global emerging markets' aggregate return of about 12% and global developed markets return of around 9% as measured by the MSCI World Index and MSCI Europe, Australasia and Far East Index, respectively, in U.S.-dollar terms.

The Fund benefited from the recovery by holding a combination of large-cap, less-risky stocks, that were driven up by better earnings; better global liquidity; and smaller, riskier companies that simply had too much risk priced in.  In particular, the Fund benefited from the reforms in Russia's electricity sector while its relative underperformance in the low growth and heavily taxes oil and gas sector helped relative performance.

The Fund's best relative performance contributors at the stock level were overweight positions in electricity companies Territorial generating Company #1 and Holding MRSK ODO, regional telecoms operator VolgaTelecom, mining companies Raspadskaya (coal) and Vsmpo-Avisma Corporation (titanium) and regional Bank of St. petersburg,  The Fund also benefited from its largest underweight position in gas behemoth OAO Gazprom, which lagged the market significantly.  Performance detractors over the period included the underweight positions in steel companies Severstal and NLMK, electricity generator RusHydro and VTB Bank OJSC.
   
CURRENT OUTLOOK AND STRATEGY:

After such a strong market performance and rebound in earnings expectations, we believe Russian valuation levels are no longer as attractive as they were immediately after the crisis.  Nevertheless, we believe they remain attractive compared to their global emerging market peers.  In a continued environment of strong global liquidity and high appetite for risk, we believe the Russian market is likely to continue to outperform other emerging and developed markets.  We are, however, acutely aware that any swing in the external environment is likely to put pressure on Russian equities and thus are monitoring closely the news flow on the global environment, inflation expectations and interest rates.  Aside from the global or external angle, we believe the Fund is positioned to benefit from a number of domestic themes including infrastructure spending, domestic consumption recovery, liberalization of markets and increasing economic links with China.  On a sector basis, the Fund continues to underweight the energy sector 9dominated by large-cap, blue chip stocks) in favor of domestic sectors, particularly utilities, real estate and the consumer sectors, while its positioning in Russian banks is currently neutral. 
"If you obey all the rules, you miss all the fun" - Katharine Hepburn

Offline shakespear

  • Supporting Member
  • Member
  • *
  • Posts: 8136
  • Country: us
  • Gender: Male
  • Status: Just Looking
  • Trips: 20+
Re: ING Russia Fund
« Reply #7 on: January 25, 2011, 12:07:10 PM »
ING provides a Semi-Annual ( April 30) and Annual (October 31) report on the activity of their family of mutual funds. The discussion on their Russia Fund (LETRX) may be of interest to some. Here is the report from 10-31-2010:

FYI:

Fund Value:  June 2, 2008:  $75.68 per share
Fund Value:  January 28, 2009:  $12.31 per share (down 83.73%)
Fund Value:  August 3, 2009:  $23.95 per share (up 94.56%)
Fund Value:  February 8, 2010:  $30.87 per share (up 28.89%)
Fund Value:  July 23, 2010:  $33.44 per share (up 8.33%)
Fund Value:  January 21, 2010:  $42.55 per share (up 27.24%)

PORTFOLIO SPECIFICS:

The Russian equity market was driven up by the momentum of the global economic recovery in late 2009 and early 2010, with additional impetus from external factors like the weak U.S. dollar and strong dollar-denominated commodities prices.  Unfortunately, Russia's sensitivity to external factors such as global risk appetite, global growth, perception about the strength of the Chinese economy and the commodity prices themselves has also brough on sharp pullbacks in Russian equities. 

It could be said that economic recovery in Russia has been a disappointment, especially compared to the recovery seen in other emerging countries.  Bank lending continued to fall until the middle of this year and has only started to show a slight recovery since.  The commercial and office real estate markets remain in a slump and only in the undersupplied residential market do we see a pickup in activity.  This has led to weaker than expected demand for construction steel, meaning long steel capacity utilization remains low.  Flat steel and slabs on the other hand, used in the building of pipelines and autos, have seen a stronger recovery as the government supported the auto sector and the large state owned equities order more pipes for energy infrastructure. 

Over the last 12 months the Fund has benefited from its fundamental approach (where stock selection within sectors has been strong) as well as its long term view (where sector allocations too have provided positive results) with low levels of portfolio turnover.  Key performance drivers have been pair trades within sectors including Novatek OAO vs Gazprom OAO in energy, and MRSK Holding vs Inter RAO EES OAO in utilities.  Standalone overweight positions Magnit OAO and X5 Retail Group NV, both in food retail, the airline Aeroflot-Russian Airlines in the industrials sector and Volga Telecom in telecommunications have also been strong contributors.   

Sector allocations and security selections both contributed to return for the fiscal year.  Of particular note was the contribution from the Fund's underweight of energy and its security selection within that sector.  Allocation and selection within financials also contributed significantly to results.  Allocations that detracted from performance included the Fund's underweight of materials and slight overweight of health care.  Selections within the consumer discretionary and consumer staples sectors hurt results.  The largest detractor actally was the Fund's operational cash position which though small detracted from relative results as stock rose significantly.

We feel it is relevant here to make a comment on the changing of the Fund's benchmark, which happened at the end of September last year.  The new benchmark, the MSCI Russia 10/40 Index, in place for the full fiscal year, has not changed the way the Fund is managed.  The Fund continues to invest in a broad range of stocks across the Russian equity market according to their attractiveness and diversification potential and has not concentrated its holdings to focus on the narrower list of stocks in the new benchmark.

 
CURRENT OUTLOOK AND STRATEGY:

It has been a difficult and frustrating year for investors in Russia as the government has committed itself to larger budgetary outlays and has been looking for additional sources of revenue to fund them.  The public battle between government ministries and the business community has increased the uncertainty around future Russian corporate taxation.  The oil industry has been hit particularly hard; the lack of a clear framework has made it difficult to value these stocks.

Generally, we believe valuation levels for Russian equities look attractive compared to other emerging markets, but it must be remembered that Russia has a market of stocks and not a stock market.  This can be explained by the wide range of equity valuations seen on different stocks and sectors within Russia, where we believe premiums and discounts are well justified given the fundamental environment for these companies.

The Fund continues to seek long term, fundamentally attractive opportunities at both the stock and sector level.  While we are acutely aware of the impact of external dynamics on the Russian equity market and the volatility that this can bring, we hold our conviction on positioning and do not aim to make significant short-term portfolio changes.  The Fund continues to seek opportunities that fit well with our view of the development of the economy, thus looking for exposure to domestic demand growth, infrastructure spending, liberalization of markets and external trade.  On a sector basis the Fund retains its underweight in energy - its most significant sector position - using this to fund overweight positions in domestic sectors.  The majority of the portfolio risk is currently being taken at the stock level, where we continue to play strong companies against weak companies within their respective sectors.   
"If you obey all the rules, you miss all the fun" - Katharine Hepburn

Offline leeholsen

  • Member
  • *
  • Posts: 678
  • Country: us
  • Gender: Male
  • Houston-NASA, the oil biz+too much country+western
    • Loveland Ski Area
Re: ING Russia Fund
« Reply #8 on: February 10, 2011, 12:52:01 PM »

you can also buy the russian etf - RSX. i've owned it before, but dont follow russia's economy close enough to hold it now.
Eat 'em up Houston Cougars !

Offline shakespear

  • Supporting Member
  • Member
  • *
  • Posts: 8136
  • Country: us
  • Gender: Male
  • Status: Just Looking
  • Trips: 20+
Re: ING Russia Fund
« Reply #9 on: August 09, 2011, 12:57:32 PM »
ING provides a Semi-Annual ( April 30) and Annual (October 31) report on the activity of their family of mutual funds. The discussion on their Russia Fund (LETRX) may be of interest to some. Here is the report from 04-30-2011:

FYI:

Fund Value:  June 2, 2008:  $75.68 per share
Fund Value:  January 28, 2009:  $12.31 per share (down 83.73%)
Fund Value:  August 3, 2009:  $23.95 per share (up 94.56%)
Fund Value:  February 8, 2010:  $30.87 per share (up 28.89%)
Fund Value:  July 23, 2010:  $33.44 per share (up 8.33%)
Fund Value:  January 21, 2010:  $42.55 per share (up 27.24%)
Fund Value:  August 8, 2011:  $35.54 per share (down 16.47%)

PORTFOLIO SPECIFICS:

The Russian equity market continued its upward momentum since the passing of the financial market crisis of 2008-2009, helped further in the last six months by the rise in energy and metals commodities.  Over this period the price of crude oil rose over 40% while nickle gained 17%, gold 14% and copper 12% all in US Dollar terms. (These returns were boosted by a weaker dollar).  With events in the Middle East and the resulting spike in oil prices, global investors have been looking to gain exposure to energy related markets, and Russia has been a clear beneficiary of this.  The MSCI Russia 10/40 index rose 25.24% in US-Dollar terms over the period; the domestic indicies, the RTS Index in US-dollar and MICEX Index in roubles, rose 28.12% and 14.3% respectively.

Over the period, the fund suffered from its overweight exposure to the domestic sectors relative to the MSCI Russia 10/40 Index; it was the non-domestic or resources sectors (both energy and metals) that were in the spotlight.  Over the course of 2010 the Fund had narrowed its large underweight in energy, as we believed that valuations were simply too low; there were a number of stock-specific catalysts that looked to be playing out too.  Yet, the fund remained underweight relative to the MSCI Russia 10/40 index; for liquidity reasons, short term sector rotation in the domestic sectors was not desireable.  What's more, we did not foresee events in the Middle east, and the Fund began 2011 still with an underweight in energy and metals.  Early in 2011, we moved to defend the Fund against changing energy prices, increasing exposure to the energy sector by selling the liquid metals and utilities sectors.  The metals sector had performed well while in utilities we became more cautious about the government's intentions to restrict pricing liberalization.  the fund maintains a preference for domestic exposure (infrastructure, consumption and banking); with the taxation debate re-emerging and the most likely targets being energy and resource companies, we believe the Fund is correctly positioned going forward.

Over the period, both the fund's sector allocation and stock selection detracted from relative performance.  Energy and materials were the best performing sectors within the MSCI 10/40 Index, rising 325 and 41% respectively, while the Fund held underweights in both sectors.  The non-resource or domestic sectors, where the Fund was overweighted and to which it remains committed, underperformed.  The negative sector allocation effect was partially offset by an underweight in utilities; however this was not enough to erase the drag to Fund results from being underweight resources and overweight domestic exposure.  Stock selection produced mixed results for the period: contributions from the energy, telecommunications and financial sector were more than offset by detractions from materials, utilities and industrials. 

The top three contributing stock positions were underweights in VTB Bank Jsc and Rushydro Jsc (electricity generation) and an overweight in Novatek Oao (gas production).  The worst three detractors were an underweight of Norilsk Nickel (mining) an overweight of IDGC Holdings (electricity distribution) and an underweight of Polyus Gold Oao (mining).  The Fund's cash position, which averaged less than 2% over the period also deteracted from relative performance as the market was on an upward trend.       

CURRENT OUTLOOK AND STRATEGY:

The strategy of the Fund remains unchanged - we concentrate on seeking to identify long-term, fundamentally attractive opportunities at the stock and sector levels.  While we are acutely aware of the impact of external dynamics on the Russian equity market and the volatility that this can bring, we hold our conviction on positioning and do not aim to make significant short-term portfolio changes.  In terms of the outlook for Russian equities, we believe the market valuation level in comparison to other emerging markest is attractive, but it must be remembered that Russia has a market of stocks and not a stock market - this can be explained by the wide range of equity valuations seen on different stocks/sectors within Russia, where premiums and discounts are well justified given the fundamental environment for these companies.  The fund continues to seek opportunities that will fit well with our view of the development of the Russian economy, thus looking for exposure to domestic demand growth, infrastructure spending, liberalization of markets and external trade.  The Fund narrowed its underweight in the energy sector but maintains a longer-term preference for domestic sectors over resources sectors, while the utilities sector has been used as a funding source and is now the fund's largest underweight relative to the MSCI Russia 10/40 index.  The majority of the portfolio risk is being taken at the stock level, where we continue to play what we believe to be strong companies against weak companies within their relevant sectors.   
"If you obey all the rules, you miss all the fun" - Katharine Hepburn

Offline shakespear

  • Supporting Member
  • Member
  • *
  • Posts: 8136
  • Country: us
  • Gender: Male
  • Status: Just Looking
  • Trips: 20+
Re: ING Russia Fund
« Reply #10 on: January 31, 2012, 11:52:39 AM »
ING provides a Semi-Annual ( April 30) and Annual (October 31) report on the activity of their family of mutual funds. The discussion on their Russia Fund (LETRX) may be of interest to some. Here is the report from 10-31-2011:

FYI:

Fund Value:  June 2, 2008:  $75.68 per share
Fund Value:  January 28, 2009:  $12.31 per share (down 83.73%)
Fund Value:  August 3, 2009:  $23.95 per share (up 94.56%)
Fund Value:  February 8, 2010:  $30.87 per share (up 28.89%)
Fund Value:  July 23, 2010:  $33.44 per share (up 8.33%)
Fund Value:  January 21, 2010:  $42.55 per share (up 27.24%)
Fund Value:  August 8, 2011:  $35.54 per share (down 16.47%)
Fund Value:  January 30, 2012:  $32.96 per share (down 7.26%)

PORTFOLIO SPECIFICS:

The Fund's fiscal year was an eventful period, with many external issues affecting the Russian equity market.  With the events in the Middle East at the start of 2011 and the resultant spike in the price of oil, global investors sought to gain exposure to energy related markets, and Russia was a clear beneficiary of this in the first half of the fiscal year.  The second half of the year was dominated by intensified European sovereign debt problems, the S&P downgrade of the united states from AAA to AA+ and the growth slowdown in China.  These factors caused a wave of risk aversion from which Russia suffered. 

Meanwhile, the economic recovery in Russia gained traction during the year, helped by strong oil prices, while the global growth picture deteriorated.  We have seen an ongoing recovery in construction, private consumption and credit growth in Russia.  Russia needs big infrastructure investments, triggered among others by hosting the Sochi 2014 Winter Olympics and the FIFA World Cup in 2018.  Big projects include roads, pipelines, and electricity networks.  We believe funding of these projects will come from privatization of state assets.

Credit growth accelerated over the year, especially private sector credit.  This was helped by the favorable liquidity situation on the back of strong oil prices and declining rates as a result of subsiding inflation.  The central bank has been successful in its monetary policy, helped by the good harvest and declining food prices.  The central bank targets inflation at 6-7% and achieved that during the Fund's fiscal year. 

In fiscal year 2011, both the Fund's sector allocation and stock selection detracted from performance relative to the MSCI Russia 10/40 index.  Stock selection was the main source of underperformance.  Energy and materials were the best performing sector in the Russian market; the Fund held underweight positions relative to its benchmark in both sectors, and therefore underperformed.  Allocation in the financial sector detracted but stock selection helped, resulting in a slight contribution to relative results.  In the consumer staples sector, allocation benefited results but stock selection detracted, resulting in a relative detraction.  The negative sector allocation performance was somewhat offset by underweight positions in the utilities and telecommunications sectors, which benefited the Fund. 

In terms of stock performance, the top three relative contributors came from underweight positions in Rostelecom (telecom) and federal grid Company (utility) and an overweight in Novatek OaO (energy).  the worst three relative performance detractors were an underweight in Norilsk Nickel (mining), and overweight in IDGC Holdings (utility) and an underweight in Gazprom (energy).

CURRENT OUTLOOK AND STRATEGY:

The strategy of the Fund remains unchanged:  we concentrate on identifying long-term, what we believe are fundamentally attractive opportunities at both the stock and sector levels.  While we are acutely aware of the impact of external dynamics on the Russian equity market and the volatility that this can bring, we hold our conviction on positioning and do not aim to make significant short-term portfolio changes.  In terms of the outlook for Russian equities, we believe the market valuation level in comparison to other emerging markest is attractive, but it must be remembered that Russia has a market of stocks and not a stock market - this can be explained by the wide range of equity valuations seen on different stocks and sectors within Russia, where premiums and discounts are well justified given the fundamental environment for these companies.

The Fund continues to seek opportunities that will fit well with our view of the development of the economy, thus looking for exposure to domestic demand growth, infrastructure spending, liberalization of markets and external trade.  The Fund
maintains a longer-term preference for domestic sectors over resource sectors.  The utilities sector has been used for a funding source but this is changing, as we see that news flow around the sector reached it lows and we expect to see the government's stance on this sector improve after elections.  We are keeping an overweight in the financial sector, as we believe sector fundamentals are strong and bank's balance sheets are healthy.  The majority of portfolio risk is being taken at the stock level, where we continue to play strong companies against weak companies within the relevant sectors. 
"If you obey all the rules, you miss all the fun" - Katharine Hepburn

Offline shakespear

  • Supporting Member
  • Member
  • *
  • Posts: 8136
  • Country: us
  • Gender: Male
  • Status: Just Looking
  • Trips: 20+
Re: ING Russia Fund
« Reply #11 on: July 27, 2015, 12:12:30 PM »
Voya took over management of this fund from ING since the last update.  Management provides a Semi-Annual ( April 30) and Annual (October 31) report on the activity of their family of mutual funds. Considering the heated debate on this topic in a different thread, the fund manager discussion on their Russia Fund (LETRX) and their outlook on the Russian economy in general may be of interest to some. Here is the report from 04-30-2015:

FYI:

Fund Value:  June 2, 2008:  $75.68 per share
Fund Value:  January 28, 2009:  $12.31 per share (down 83.73%)
Fund Value:  August 3, 2009:  $23.95 per share (up 94.56%)
Fund Value:  February 8, 2010:  $30.87 per share (up 28.89%)
Fund Value:  July 23, 2010:  $33.44 per share (up 8.33%)
Fund Value:  January 21, 2010:  $42.55 per share (up 27.24%)
Fund Value:  August 8, 2011:  $35.54 per share (down 16.47%)
Fund Value:  January 30, 2012:  $32.96 per share (down 7.26%)
Fund Value:  July 27, 2015:  $23.39 per share (down 29.04%)

PORTFOLIO SPECIFICS:

The Russian equity market witnessed increased volatility over the reporting period.  A combination of weak oil prices and Western sanctions pushed the Russian economy into a recession.  The military escalation in Eastern Ukraine and unprecedented decline in the value of the Russian ruble verses the US dollar initially caused a broad market sell-off.  This was followed by a market reversal in the beginning of 2015, after signing of the Minsk Agreements and successful measures taken by the Central Bank of Russia to stabilize the currency.

For the reporting period, the Fund outperformed the RTS benchmark.  The Fund outperformed the MSCI Russia 10/40 Index before the deduction of fees and expenses, but underperformed net of fees during the reporting period.  Fund results were driven by sector allocation, particularly by contributions from the Fund's underweights in the telecommunications services and utilities sectors.  By contrast, the Fund's underweight allocation to the financial sector detracted from performance.  Stock selection in the financial and consumer staples sectors detracted from results, while the Fund benefited from stock selection in the materials and energy sectors.  The Fund maintained an allocation to cash, which, on balance detracted from results during this volatile period. 

The Fund continued to invest in companies that we believed were well-positioned to benefit from stable demand for Russian exports and good standards of corporate governance.  We had a preference for exporters, which we believed would benefit from a weaker ruble and limited exposure to domestic, consumption-driven companies during the reporting period. 

The top three stock contributors to relative performance were Rostelcom (telecommunications, underweight) Surgutneftegaz, (energy, overweight) and Rushydro JSC (utilities, underweight).  The bottom three stocks detractors from relative performance were VTB Bank JSC, (financials, underweight), Magnit PJSC (consumer staples, overweight), and Gazprom Neft (energy, overweight).
 
CURRENT OUTLOOK AND STRATEGY:

Our base case scenario remains that Russia is likely to limit its future involvement in Eastern Ukraine and maintain the current frozen nature of the conflict.  Nevertheless, we remain skeptical about swift removal of Western sanctions in the near future.  We continue to see weak domestic demand and downside risks to economic growth given current oil prices and unresolved geopolitical tensions in 2015.  We believe that, in the current environment, future oil prices form the single most important forward-looking indicator for the Russian economy. 

While higher oil prices will be clearly beneficial to future economic development of the country, we do not believe that the Russian government can rely on rising oil prices alone to generate sustainable economic growth and increase standards of living for a majority of it's population.  In the absence of spending cuts and alternative sources of economic growth, we do not believe that the Russian budget can sustain recent levels of domestic consumption and social spending in the future. 

It is our opinion that the Russian government has chosen to maintain the status quo and avoid introduction of economic and fiscal reforms in the anticipation of the future oil price recovery.  There is no evidence of a fiscal policy adjustment to permanently lower oil prices.  Positive trade balances and considerable hard currency reserves make this choice possible but hardly encouraging for new sources of future economic growth.  It's possible that Russian leadership will struggle to identify what this new model of economic development should be and whether it has adequate resources to implement it.  Without having a clear direction, it could be better to stand still for a moment.  However, we believe that the duration of this reflective moment and probability of future economic reforms are inversely correlated with future oil prices. 
"If you obey all the rules, you miss all the fun" - Katharine Hepburn

Online andrewfi

  • Supporting Member
  • Member
  • *
  • Posts: 20729
  • Country: gb
  • Gender: Male
    • Articles About Almost Anything!
Re: ING Russia Fund
« Reply #12 on: July 28, 2015, 05:23:40 AM »
How do those amounts work out in ruble terms?
...everything ends always well; if it’s still bad, then it’s not the end!