Fund Research

Baring Emerging Europe

Last update 14 May 2019

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by Baring Emerging Europe. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

Investment objective

To achieve long-term capital growth, principally through investment in Emerging European securities.

As at:

09/05/2019

Group/Investment

Baring Emerging Europe Ord

Ticker

BEE

Management Company

Baring Asset Management

Manager Name

Matthias Siller;Adnan El-Araby;Maria Szczesna;

Association of Investment Companies (AIC) Sector

European Emerging Markets

12 Mo Yield

4.5%

Dividend Distribution Frequency

Annually

Latest Market Capitalisation

£96,824,077

Latest Net Gearing (Cum Fair)

4%

Latest Ongoing Charge Ex Perf Fee

1.50%

Shares Outstanding

 12,723,269

(Discount)/ Premium (Cum Fair)

-7.3%

Daily Closing Price

761p

Baring Emerging Europe (BEE) aims to provide capital growth and a high dividend yield from a portfolio of stocks in developing Europe, mainly Russia, Poland and Turkey. The manager, Matthias Siller, focuses strongly on bottom-up stock selection to generate returns, and has produced impressive amounts of alpha over the past five years, higher than all but one of the global emerging markets trusts.

While total return performance has been strong, the income dimension is a more recent feature. Since the start of 2017 the trust has paid semi-annual distributions, been able to pay dividends from revenues or capital and been committed to paying an uncovered dividend where necessary. The dividend yield is therefore an impressive 4.5%, higher than all but one global equity income trust and all but one global emerging markets trust. BEE therefore offers a diversifying source of income from a region which, being an emerging market, offers strong long-term growth potential too.

Emerging Europe, as a region, is trading on depressed valuations, with the forward P/E on the index just 6.7x compared to 11.6x for the mainstream Emerging Markets index, 13x for developed Europe and 15x for Brexit-hit UK. As such, it represents an interesting “Value” opportunity for investors.

BEE is trading on a discount of 7.3%. Although the discount has narrowed after a strong start to 2019, we understand that the trust will need to average a 9% discount or under from the end of April to the end of September to avoid a tender offer early next year. We note that after the announced winding up of BlackRock Emerging Europe, BEE is the only specialist investment trust focused on this region.

Thomas McMahon

Disclaimer

This report has been issued by Kepler Partners LLP.  The analyst who has prepared this report is aware that Kepler Partners LLP has a relationship with the company covered in this report and/or a conflict of interest which may impair the objectivity of the research.

Past performance is not a reliable indicator of future results. The value of investments can fall as well as rise and you may get back less than you invested when you decide to sell your investments. It is strongly recommended that if you are a private investor independent financial advice should be taken before making any investment or financial decision.

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Fund History: Baring Emerging Europe

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