Balkan prospects brighten as reforms continue

Convergence, greater political certainty and privatisation programmes will be good for South Eastern European markets. Balkan stock prices will benefit, says Luka Flere, head of asset management at KD Skladi

KD Skladi (KD Funds in English) is Slovenia’s foremost fund management operation. It is part of KD Group, one of the country’s largest investment, insurance, capital investments and fund management groups with over €1bn assets under management at the group level, of which around half lies within the asset management division. It also claims an impressive list of firsts in a region where investing in funds is a relatively new phenomenon. It runs the country’s oldest mutual fund KD Galileo and created Slovenia’s first fund of funds and money market fund.KD Skladi was established in 1994 as the first Slovenian asset manager. It took over the running of the Galileo fund two years later. The fund in January 2012 celebrated its twentieth anniversary with pleasing results for investors in its top-down, bottom-up flexible global portfolio. Over the fund’s lifetime, initial investors made more money than they would have tracking the MSCI World or MSCI Emerging Markets indices. Returns were higher than those of Warren Buffet’s Berkshire Hathaway fund, despite the devastating effects of the financial crisis on portfolio values. Since Slovenia joined the European Union in 2004, KD Skladi has developed its investment skills and reach. It now runs 14 funds covering global, emerging, regional and country- and sector-specific remits. It has also attracted a growing number of European investors to its locally domiciled funds that specialise in South East European equities. The KD Balkans fund typifies the firm’s approach to markets in Slovenia, Croatia, Bosnia and Herzegovina, Serbia, Macedonia, Montenegro, Greece, Romania, Bulgaria and Turkey. Some markets are already classified as emerging and well integrated with the EU. Others remain outside, either on the path to integration or remaining true frontier market status. Croatia is expected to join the EU in July this year.