Good uncorrelated performance of Balkan Emerging Frontiers Fund


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Balkan Emerging Frontiers Fund was launched in April 2010 and it began investing in August of the same year. On the occasion, such as it is the fifth anniversary of start of  investing, we would like to thank you for your trust and further commit ourselves to continue directing all our energy, time and effort at achieving our main mutual objectivemaximizing return with lowest risk possible.

The value of all main stock exchange indices from the region of former Yugoslavia, with the exception of Montenegro’s MONEX20, have dropped this year. Largest decrease until end of August were so far marked by Slovenian SBI TOP (-11.69%) and Macedonian MBI10 (-9.64%).

Despite this negative trend, BEF Fund YTD return is positive. Your net return for the first eight months of this year amounts a bit less than three percent. Since the beginning of this year, BEF Fund is thus performing much better than mutual funds investing in the western Balkans, as their YTD return is mainly negative!

Performance comparison of the funds over the past five years shows a substantially higher, in fact, a huge advantage of BEF Fund.

Total net return of BEF Fund in 61 months, since the beginning of investing amounts almost 100%!

It is clear from the graph that the other investment funds generated a loss of 15-25% in the same period (except KD Balkan Fund that made a positive return of 3% in this period), while BEF fund made more than 98% net return for you! For instance: someone who invested EUR 10,000 in average “Balkan” mutual fund three years ago, now only has about EUR 8,000 worth of investment, while with the investment into BEF Fund the same amount raised to almost EUR 20,000. For those investing in BEF Fund for five years, this represents about 150% (20,000/8,000) higher value of the investment, than for those keeping the investment in other “Balkan” funds.

We are stressing the difference in performance for two reasons. The first: the significant differences in the quality of investment management and consequently different returns are shown only after a longer period. The second: We deeply believe (and act accordingly) that truly good returns (while minimizing the risk) can only be achieved with medium to long-term investment approach Scrabbling for short-term returns and hopping from trend to trend almost always finishes badly. There are many reasons for that: high transaction costs, higher tax liabilities in most cases and most importantly: majority of such ‘trend chasing’ investments finish up purchasing securities around their maximum values and then selling them near their bottom value.

BEF Fund makes so much better returns than other mentioned investment funds due to active investment management. Unlike traditional mutual funds, which act mainly as passive portfolio investors, BEF Fund uses all possible legal and other legitimate measures to minimize risk and maximize returns. With 19 years of experience with stock investing in the region of former Yugoslavia, we have exceptionally good network of contacts and information sources. Besides getting stock information faster than others do, based on many years of valuable experience we are able to evaluate it quickly and with high quality in order to apply it in your best interest.

Once again, we stress that great returns are generated by investing on a longer time horizon. On longer term, stock markets “tend” to move toward mean values, with possible large fluctuations around them. The longer the duration of a large undervaluation of the stock market prices, the stronger is the rise when it comes to it. The history of stock markets has clearly shown with countless examples that the longer a market is squeezing down, the stronger the growth, when the tide turns again. Legendary stock investor André Kostolany repeatedly noted that this applies to all markets without exception, no matter how exotic they are.

Western stock markets have increased greatly in recent years, so it is too late to invest there now! Now it is the time for the Balkans! We are repeatedly writing about the huge growth potential of stock markets in former Yugoslavia region compared to global stock markets. Global stock exchanges have been rising since March 2009, for 6.5 years. Despite all the panic and pessimism at intervening short-term corrections. Stock markets in the region of former Yugoslavia have suffered the largest drops since 2007, with no substantial recovery since. So, while more and more global indices are close to or even above their 2007 maximums, some stock indices from former Yugoslavia region are only at around 15% of their former maximums.

Based on previous experiences it might soon be too late for participation in excellent returns. Due to low liquidity, the market will raise at least 100% before majority of investors will realized it, and probably even more, before they react properly.

Time to invest now! Once the Balkan stock markets will hit news’ headlines once again, it will be too late! By then we will reap great returns for you!!

Kind regards,
Balkan Emrging Frontiers Fund

Telephone/fax: +41 22 518 02 39

The Fund is a Segregated Portfolio of JP SPC 5, a segregated portfolio company with limited liability.

This document is intended for institutional investors or high net worth individuals. If you do not fall into those categories please disregard and delete it. Portions of this document may contain information about funds and services, which may be restricted by law in certain jurisdictions. Any information in this document is not an invitation to invest in the funds, nor does it constitute an offer for sale of shares in the funds or any investment whatsoever. Further information is only available to pre-qualified, qualified or accredited investors. Subscriptions for any class of shares in the funds can only be made by completing the subscription agreement for the relevant shares and after having been provided the offering documents as described in the subscription agreement.

Each prospective investor should consult his/her/its own legal counsel, accountant or other professional advisor for advice concerning the various legal, tax and economic considerations relating to the fund and offshore investment generally. Neither the fund nor any promoter can give any guarantee that tax relief or other tax benefits will be available, or that the current tax treatment of the fund will remain unchanged in the future in the jurisdiction where the prospective investor is a resident or of which he/she/it is a citizen.

This information is being issued or presented by the Investment Manager for information purposes only and no representation is being made by the Fund or any agent of any affiliate of the promoter as to the accuracy or completeness of the information contained in this document. Although information in this document is provided in good faith no investment decision should be based on it as it is not verified. Past performance is no guarantee of future results. There is significant risk involved with equity trading.

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