Jan Pricop, the deputy general manager of asset management company KD Investments last year obtained the highest yield on the mutual fund market, 30%, betting on BRD, PRT and ART shares.
The main fund he manages, KD Maximus, generated an almost four times higher yield than that offered by the average interest rate on a bank deposit, which stood at around 7.5%.
The mutual fund market in Romania is still in its early stages of development, with assets worth less than 300 million euros. In the West, where mutual fund assets amount to hundreds of billions of euros, fund managers are among the most important players on the capital market, regularly turning trends and ideas into capital.
KD Maximus, which totalled 12 million euros in assets at the end of last year, and boasted more than 900 investors, was one of the few funds that exceeded the increase of the BET index, 22%. With a constant exposure of 70% of its assets to shares listed on the Bucharest Stock Exchange and RASDAQ, KD Maximus managers anticipated the depreciation of the SIFs last summer and made a move that was as inspired as it was profitable: they reduced their exposure to SIFs and bought more in BRD, in petroleum service company Rompetrol Well Services (PTR) and in piping manufacturer TMK-Artrom Slatina (ART). The result of this move was visible at the end of the year, when the fund surpassed the SIFs' 24% yield.
"It's good to have a few important issuers that keep a significant and constant share in your portfolio and sustain the yield of the fund for entire year," Pricop explains.
He adds that the decision to invest has to be based on thorough knowledge of companies, which often entails visiting them. Pricop bets on industrial companies this year, which are witnessing fast-paced growth, such as those in the metallurgical industry and equipment manufacturers.
Regardless of where the Stock Exchange goes or the prevailing sentiment of the capital market, one should not invest relying only on what financial reports say or what you read in the papers, says Jan Pricop.
"You have to go there, talk to the management, take the pulse of the business."
To the KD Maximus manager, visits to companies whose shares are included in the fund's portfolio play an important part in the final decision on whether to buy or not.
"Analysts take field trips and ask questions about financial results. They have to discover what's behind the figures, what the management plans to do with that particular company," Pricop explains, adding such visits are not always well received.
The decision to invest in a specific stock is made by the entire group in Slovenia.
"There is a board of portfolio managers of the Slovenian KD group, which receives the reports of the local analysts about potential growth targets. The board makes the final decision if that particular share is eligible for inclusion in the investment fund portfolio and local managers decide how much and when to buy," Pricop concludes.
With its 30% yield, KD Maximums left behind Omninvest fund, managed by SIRA, which had been the best performer in 2005 and 2006.
Omninvest came second in 2007, with 24.8% yield, followed by BT Maxim (24.7%) according to the National Union of Collective Investment Bodies (UNOPC).
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