By Ivan Anderzhanov in Moscow
Swedish investment firm Prosperity Capital Management has crowned its Russian fund as the best global performer during the noughties .
Prosperity issued a press release today claiming its Prosperity Quest Fund has returned a whopping 3,604% in the decade to December 2009. It followed a similar claim by East Capital for its Russian fund less than a month ago.
East Capital, which is also Swedish, insisted its Ryssland Russian vehicle was the best performing publicly-traded equity fund in the world. It claimed Ryssland had returned 1,524% in dollar terms during the past decade "which is 561% better than the second best fund and 826% better than the benchmark index RTS over the same period."
But Prosperity chief economist Liam Halligan, said in a statement: "We respect East Capital's record but as the various tables in our report show, all downloaded from Morningstar this week, the claim is simply not true.
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{ 4 comments… read them below or add one }
Prosperity isn’t “claiming” anything. Our data was downloaded from Morningstar this week. Our best performing fund – Prosperity Quest – returned 3,604% between 1/1/00 and 31/12/09, according to Morningstar. Over the same period, Prosperity Cub Fund returned 1,828% and Russian Prosperity Fund gained 1,605%.
These three PCM funds are all well ahead of East’s Ryssland Fund – which returned 1,564% on a 10-year basis. They all beat Ryssland on a 5-year and 1-year basis too. Yet East claims Ryssland is “the fund of the decade”. This is, at best, disingenuous. Prosperity Quest has a 10-year percentage point return that is 2.3 times bigger than East’s best fund !!
East has limited its table of the world’s “top” funds to UCITS funds – yet, in the press release they issued in mid-December, before the decade was even over, they buried that stipulation in a footnote. East can only claim to be “fund of the decade” if they deliberately ignore the three PCM funds that have trounced their best fund.
PCM has just issued its 10-year performance report – which contains various tables downloaded from Morningstar showing the top funds in Russia, and the world, during the “noughties”. We have made it publicly available at – http://www.prosperitycapital.com
Distinguishing our performance from that of East and disproving their claim is not a matter of “ego”. PCM’s 2.3-times out-performance over East is a matter of “fact” – and that’s what is important to investors and potential investors.
Liam Halligan, Chief Economist, Prosperity Capital
Dear Liam,
As much respect as I have for Prosperity funds, as an analyst following Russian market fund space, I would like to disagree with the analysis you have provided – not with the results but with the peer group you have used… There is a number of funds that just don’t report their numbers anywhere, unless you go to them directly. I do not know a single investment professional who would simply take ten-year returns from Morningstar and invest without trying to understand how the fund got their returns and what is the fair comparison.
As far as comparison to RTS, this benchmark was not even investable until a year or two ago…
Helen,
Thanks for your comment. Of course, there are some funds that don’t report. I think it’s fair to say, though, that Morningstar provides a pretty authoritative cross-section of the industry.
No-one is suggesting that any potential investor should simply look at a 10-year return, then rush to invest. It is obviously crucial to ask lots of questions and understand how funds have made their returns in the past, and how they intend to in the future. Some of the best known “investment professionals” have recently learnt that lesson to their cost.
Prosperity Capital Management spends a great deal of time talking to investors and potential investors about the companies we invest in, and why. We believe in transparency – producing detailed monthly performance sheets for our various funds, showing all main holdings, as well as our general “Prosperity Monthly” newsletter. Our newly-published 10-year performance report – available at http://www.prosperitycapital.com – provides further commentary on our investment approach and there is even more detail elsewhere on our website.
We don’t “benchmark” our funds, as such. But experience teaches me that the first thing almost any potential investor wants to know, when they see our outstanding performance numbers, is how “the market” performed over the same period. That, of course, gives an indication of the value-add provided by the Manager – what investors are supposed to be paying for.
As the table on p.4 of our 10-year report shows, also downloaded from Morningstar, many of the big names running Russia-funds over the last decade are way “behind the index” – on a 10-year, 5-year and 1-year basis. Again, we think global investors now eyeing the Russian market will find such information useful in deciding if, when and how they want to gain exposure to what, over the last decade and despite the near-constant drum beat of negative media coverage, has been the world’s most rewarding major stock market.