Private Investor: Lifting the curtain on Eastern European investment options
Saturday 01 May 2004
Timing, as they say, is everything when it comes to journalism and investment.
Timing, as they say, is everything when it comes to journalism and investment. So now is a good moment for a writing private investor to ponder the arrival today of the 10 new members of the European Union, mostly from the former Comecon bloc. It is unalloyed good news. However, I have the feeling that when it comes to buying into these potential success stories my timing has been slightly awry.
Let me explain. Way back in the middle 1990s, not long after the collapse of Communism, there was the largest and most successful launch of a collective fund in modern history: the Mercury European Privatisation Investment Trust (MEPIT). Now almost forgotten, it represented all that was right and all that was wrong about the western half of Europe's interest in the eastern half. For the very title reminded the average British investor of the easy money made during the great state denationalisations of the 1980s.
At first the fund itself was as interested in Spanish, French and Italian sell-offs as those further east, but as the 1990s wore on the hope was that even if the west European governments weren't prepared to give away their state assets, as was becoming clear, then the central and Eastern European governments might be desperate enough to do so. If Sid could make money out of the sale of British Gas, why should he not make even more out of the sale of the Czech gasworks? That was the appeal to greed implicit in the fund's prospectus.
What was more uplifting was the prospect of a wall of investment heading east to fund the region's catch-up with the west. Rapid accession to the European Union was the guarantee of eventual economic and political security. Greed, perhaps, might do some good.
Things didn't turn out that way, and I have to admit that I was caught up in the excitement of those times. There was a dearth of promising open privatisation issues in the old planned economies. Crony privatisation, especially in Russia, and the simple expedient of inviting big western utility and other firms to buy the companies direct put paid to any dreams of pan-European stagging. The most damaging event was the Russian crisis and rouble devaluation of 1998.
Before too long the fund underwent changes in control, in name and remit until now, as the Merrill Lynch European Trust, it is not much more than a tracker for the main (west) European markets and is facing a winding up in the summer. So this great fund goes out with barely a whimper. To be fair, the overall returns since the mid-1990s have been around 70 per cent, but not what investors once supposed possible. I stuck with the fund, but am glad that my investment was small and that I stopped subscribing when it changed its mandate.
Such disappointments may explain why there is still a shortage of small-investor friendly vehicles for investment in the region. It is a pity. The Russian stock market grew by about 50 per cent last year, as did the Czech and Polish bourses. Such markets are volatile but the potential for long-term growth is clear, although constantly threatened by low standards of probity. Tourists in Prague and Budapest (such as your correspondent) may find themselves enchanted by these cities but bitterly resent being ripped off by airport taxis that seem to be run by mafiosi. So what ought to be a great engine of growth - tourism - is compromised by petty fiddles.
As far as I can see the only accessible ways to invest in the east are as follows: Credit Suisse European Frontiers, JPMF New Europe and Jupiter Emerging European Opportunities in the unit trust sector, plus Baring Emerging Europe and Eastern Europe as investment trusts. I have a small investment in the JPMF New Europe fund, which I took up on the failure of the MEPIT, but what to buy now?
It is a matter of performance and charges. The unit trusts have high initial charges of between 5.25 and 5.5 per cent, a suspiciously coincidental set of numbers. However, such charges can be reduced by approaching a discount broker. For example, the JPMF fund's charge is cut to 1 per cent if you buy through Ample (iii.co.uk), and the fund seems to offer decent performance for the less risk-averse investor: I wouldn't wish to invest all at once but on a regular modest basis. My timing isn't great - I should have been doing this two years ago - but it seems an appropriate way to celebrate the reunification of our common European home.
Compare with the Independent: See how much you could save by switching credit cards. Compare now
- 1 International Women's Day 2014: The shocking statistics that show why it is still so important
- 2 Orgasm machine to deliver climax at the push of a button
- 3 Dear 'The Sun', breast cancer isn't sexy
- 4 Teacher shows sex tape featuring herself to pupils during class by mistake
- 5 Singapore sting: Sky-high prices are pushing locals to the edge of affordability
Britain's top vet sparks controversy with call for ban on slashing animals' throats in 'ritual' slaughters for halal and kosher meat products
If you're horrified by a flame-roasted dog, you should be shocked at a hog roast
Poor 'live like animals' says Boris's privately educated sister after going on 'poverty safari'
Exclusive: Impact of immigrants on British workers ‘negligible’
Vince Cable: Teachers 'know absolutely nothing' about the world of work
Ukraine crisis: Russia pledges to 'retaliate against sanctions' as Ukrainian president says Crimea vote will not be recognised
iJobs Money & Business
£12000 per annum: Inspiring Interns: The company works with Tier 1 FTSE 100 Ba...
£32000 - £36000 per annum + generous benefits: Pro-Recruitment Group: * TAX * ...
£37000 - £40000 per annum + £20000 benefits package: Pro-Recruitment Group: **...
£30000 - £35000 per annum + generous benefits: Pro-Recruitment Group: Mixed Ta...
Day In a Page
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony
A charming four-bedroom Oxfordshire cottage with oak floors and chunky-beamed ceilings, £465,000
A beautiful one-bed flat in a sought-after portered block, with access to Norland Square communal gardens
A one-bedroom flat within a Sixties school conversion with high-spec design and open-plan kitchen, close to Lambeth North Tube, £435,000
A 17th century four-bedroom house, with open fireplaces, cellar and pool, £600,000
A three-bedroom, coach house with luxury open-plan living space and contemporary breakfast bar
A newly refurbished one-bedroom flat in the heart of Mayfair, close to Grosvenor Square
A charming four-bedroom house overlooking Burleigh Square Park, close to Thorpe Bay
A three-bedroom farmhouse with a large inglenook fireplace and exposed beams
A boutique mews house, set around a central courtyard, with three bedrooms and a private roof terrace
A four-bedroom farm-conversion with three bathrooms and two reception rooms
A two-bedroom detached house with ensuite bathrooms and a sun-drenched decked terrace, £750,000
A modern and spacious two-bedroom, penthouse flat with two bathrooms in a prestigious development
A beautifully renovated five-bedroom terrace with three reception rooms and a courtyard garden, £700,000
A four-bedroom period house which has been extended to provide almost 2,500sq ft of living space, £675,000
A pretty three-bedroom Georgian home with a 22ft drawing room and a master suite with a balcony, £525,000
A substanstial family home with five bedrooms and landscaped gardens in the much sought-after Branksome Park area
A well-presented three-bedroom house with front and rear gardens, close to White City station, £475,000
A handsome five-bedroom house in a sought-after location close to the city centre
A five-bedroom country home with valley views, equestrian stables and 27 acres of land, £725,000
A six-bedroom farm house with separate, detached cottages and 371 acres of land
A two-bedroom cottage with parquet floors, chunky beams and an open fireplace
A three-bedrrom flat with 2,733sq feet of living space, a beautiful private garden and 15 acres of communal grounds
A four-bedroom chalet bungalow with three bathrooms and a spacious garden, £525,000
A two-bedroom flat with an open plan kitchen and two balconies, close to Arsenal station
A Grade II-listed home with six bedrooms, secluded landscaped gardens and views across Hadley Green
A Grade II-listed mansion with two apartments and a cottage, near Gretna Green
A three-bedroom Grade II-listed mews house with vaulted ceilings and roof garden
A spacious Grade II-listed family home with annexe and equestrian facilities among four acres of land in Itchingfield
A four-bedroom home with exposed brick walls and open fires in the picturesque village of Northill
A Grade II-listed property with five bedrooms and unique tower, overlooking Hastings Old Town
A charming five-bedroom detached family home, set within half an acre in Kew