Bulgaria Advance Invest Reaches 66.7% Annual Yield, Aims SEE Expansion

Advance Invest, Bulgaria's only equity mutual fund, said on Tuesday its investment in local shares produced a 66.7% yield in its first year of operations and added it would expand to other markets in southeast Europe.

"We have received approval by the Financial Supervision Commission to invest in shares listed in Romania and we will be ready to start buying Romanian shares at the end of this week," Daniel Ganev, chief portfolio manager of Karoll Capital Management, which manages Advance Invest, told SeeNews.

"We want to invest in other markets in the region, like Serbia, Croatia, Ukraine, as all these are emerging markets that provide possibilities for high yields, but we still need the approval of the commission."

Ganev added the financial watchdog was concerned by the plans as emerging markets in southeast Europe carry a relatively high risk. The financial supervisor only approved Advance Invest's investment in Romanian shares after the country, together with Bulgaria, signed its accession treaty with the EU on April 25.

"But we hope to get the commission's green light for investment in other markets in the region and it would be great if we could enter two foreign markets per year," said Ganev.

BETTER THAN MARKET

Advance Invest, which was launched on May 10, 2004, achieved an annual yield of 66.7% before taxes in its first year of operation, when it invested mainly in Bulgarian equities and also in debt. At the same time the blue-chip SOFIX index of the Bulgarian stock exchange rose 62%.

"For the next operating year, we expect the yield of Advance Invest to remain higher than the yield of deposits and bonds, for example, but I don't think the yield will be as high as last year, as I don't expect SOFIX to jump so much this year," said Nikolai Martinov, head of the brokerage arm of the financial company Karoll, which owns also Karoll Capital Management.

The assets of Advance Invest rose by some 14 million levs ($9.2 million/7.1 million euro) during the 12 months to May 10, 2005, to nearly 16 million levs, helping the fund achieve a 26% market share. The funds' shareholders number grew to more than 600 from 11 a year earlier.

Advance Invest has recently become the first Bulgarian mutual fund to be added to Bloomberg's information system.

"This will ease foreign investors, as they will be able to see Advance Invest's prospectus and share price movements on each Bloomberg terminal," Ganev said.

Karoll Capital Management has recently registered a second fund of the Advance family – Advance Terrafund, which will invest in land.

"We have plans to set up also other investment funds that will focus on various types of investments," said Ganev, but declined to elaborate.

(1 euro=1.95583 Bulgarian levs)

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