CEEAAM - Assets in Focus
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Assets in Focus

CEE Markets

Due to our regional capabilities, we primarily focus on the investment possibilities in Europe, specifically those of the CEE region. Nevertheless, to diversify risk in our client portfolios, we often include investments from other regions and sectors as well.

Bonds

CEEAAM manages both HUF and foreign currency-denominated bonds (EUR, USD, GBP, CHF) in its client portfolios. Our investment managers select their top picks from over one-thousand liquid corporate and government bonds.

We closely follow MOL and OTP bonds with several maturities and coupons from the domestic list, and track the issues of Polish TPSA, Czech CEZ, Russian GAZPRU and KKAZ, as well as following Georgian BKGEO. REPHUN (Republic of Hungary) and MAGYAR (Hungarian National Bank) issues in EUR, USD, and GBP count as the most widely-held bonds from the foreign currency government and agencies bond sector. Eurobonds of Poland, Czech Republic, Slovakia, Latvia, Lithuania, Serbia, Macedonia, Slovenia, and Bulgaria are also considered frequent investment targets. If the investment policy allows, our managers will also invest in local convertible bonds such as HUSTHO (Richter), MAGNO (MOL), and OPUSSE (OTP).

Equities

In addition to investments in local blue-chips (OTP, MOL, MTEL, RICHTER, and EGIS), our professionals look for investment possibilities on all regional CEE stock exchanges. The largest is the Warsaw Stock Exchange, which lists 400 companies with 100 billion EUR capitalizations. Preferred companies include PGNIG, TPSA, LOTOS, KGHM, PKOBP, and PKNORLEN. The Romanian market is also viewed as an attractive market, offering products like SNP and SIFs, although it does not have as much liquidity as Poland.

Global Markets

Although we consider ourselves as CEE market specialists, we also follow the global markets and believe it is important to include names with a global presence in our portfolios.

Corporate Bonds

Western European and U.S. corporate bond markets are considered to be well researched. Automobile sector issues, like BMW, RENAULT, GM, F, PSA, DAIGR, and VW performed extremely well in 2009.

Other top picks included the bonds of tobacco makers (IMTLN, BATSLN), and the telecommunications sector (DT, OTE). Our partners provide us with access to a wide variety of investment possibilities in the industrial, healthcare and utilities sectors as well.

Perpetuals

Some client portfolios also include issues of corporate hybrid bonds, as they are considered an asset class between bonds and equities, combining the advantages of both. These bonds tend to offer coupons with yields that are generally much higher than those of traditional bonds. These popular perpetual issues include names like GE, BAYGR, LINDE, SOLBBB, HENKEL, or the less liquid (EUROCL). Financial Tier1 issues (ISPIM, BNPP, HSBC, LLOYDS, SOCGEN, BACR, etc.) are typically only suited to specific investment profiles but, in the context of a diversified portfolio, they should not be overlooked. Despite being called bonds, these securities have a very different risk profile to traditional bonds. Perpetual bonds involve a great deal more speculation as a result of the uncertainty as to whether and how much of the principal will be repaid (contrary to traditional bonds where the reimbursement of the principal on the maturity date is always certain regardless of market conditions).

Floaters

In these times of financial insecurity and volatile markets, Floating Rate Notes are experiencing a renaissance in the market. We invest in such instruments as they are comparable to time deposit but can be sold at any time. The defensive character of the product means that the investor can remain calm, even in times of large interest rate fluctuations, because the ongoing interest rate is regularly adjusted to the respective new interest rate level. Our most popular picks include the issues of DB, BAC or MER.

Equities

There is a significant difference in the liquidity of Western, U.S., and regional blue-chips. The German and English stock exchanges offer practically all of the European-listed companies in one place; therefore we mostly look for investment alternatives in these markets. Having access to other major international exchanges (NYSE, TSE, HKG, etc.) enables our managers to diversify away from European risk.

Alternative Asset Classes

Investments in commodities like gold, metals, energy or agricultural products are included in this class. Besides commodities, real estate investments, foreign exchange products and hedge funds are classified among alternative assets. CEEAAM realizes these types of investments in the form of certificates or warrants.