QWL offers investments in new Europe

Australian investment fund manager QWL is offering investors the opportunity to enter into Central and Eastern Europe (CEE) equity markets through the launch of a new fund.

The QWL New Europe Fund will be the third international fund in the QWL portfolio and is a multi-manager, medium risk fund with a return rate target of 12 per cent a year.

The new fund is looking to select underlying managers with experience in the Baltic states and former CEE countries and is targeting investments in South-East European countries due to join the European Union (EU).

Chief executive officer of QWL Ross Hopkins said: “We have selected Hansa Investment Funds (Hansa) and SEB Uhispank Asset Management (SWEB) for their specialist expertise and considerable track record in portfolio management in that region. Both asset managers are part of larger Swedish international banking groups.

“We do not use fund managers who are index hugging, because in these emerging markets, a stock index rarely mirrors economic reality. Our managers are selected based on their knowledge of the companies where the funds are invested, excellent bottom-up research and active management of their investments. We benchmark our funds at 12 per cent growth per annum and are obviously very pleased to be achieving returns in excess of twice our benchmark with our first two funds.”

QWL is looking to take advantage of the ’convergence factor’, whereby the costs and incomes of people in the CEE are significantly lower compared to established EU countries.

The economic gap between ‘new Europe’ and older EU members has been rapidly decreasing because the region no longer has economic borders and with the help of EU policies and funding, in particular the surge of EU infrastructure funds.

Hopkins also pointed out that the region was experiencing significant growth in investment as established western industries relocated to take advantage of the lower cost base. For example, it has been projected that the strong trend would continue in the Baltic States for another eight years.

In terms of predicted stock market growth, the CEE is ranked second after China in 2007. With the macro economic convergence of new Europe, their economies are moving much faster than more established EU states.

The European market has also surpassed the capitalisation of the US market in April 2007 due in part to the rise of the euro against the US dollar and the growth in Eastern European markets.