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East Capital Balkans

East Capital Balkans

NAV

28.34 EUR

1 day

-0.32%

YTD

+19.50%

Date

2025-07-18

Sustainability

Article 8

NAV

44.78 SEK

1 day

-0.96%

YTD

+16.96%

Date

2025-07-18

Sustainability

Article 8

NAV

32.57 EUR

1 day

-0.32%

YTD

+19.92%

Date

2025-07-18

Sustainability

Article 8

East Capital Balkans mainly invests in shares of companies in Greece, Romania, Turkey and Slovenia. As market conditions change, the fund may also invest in other countries in the region such as Bosnia and Macedonia.

The fund’s strategy is to invest in companies that benefit from long-term development trends such as EU convergence, growth in domestic consumption and investment in markets that are in an early phase of transition. The fund has an all-cap mandate and actively seeks exposure to smaller companies. The fund can have up to 10% of its net asset value invested in a single issuer, with most holdings being under 5%. The fund has a low turnover rate.

The investment style is based on a long-term perspective, fundamental analysis and active stock-picking, combining growth with value.

East Capital Balkans fund delivered an impressive 19.3% return during the quarter. Strong market contributors included our holdings from Greece (+27%), Moldova (+44%), Hungary (+22%), Slovenia (+21%), and Romania (+18%).

Greece was the best-performing market, with our holdings gaining 27%, driven by investor confidence ahead of its expected upgrade to developed market status, signalling improved economic fundamentals. Fiscal discipline, ongoing reforms, and steady EU fund inflows also supported growth, boosting bank valuations and market sentiment. Banks were by far the strongest performers, up 30-47% during the quarter. Alpha Bank was the best performer, up 47%, due to its lower valuation and increased cooperation and a potential bid from Unicredit. Alpha Bank is one of our larger holdings in the fund and added 16 basis points of alpha. Another strong performer was our largest Greek holding, Optima Bank, up 46% during the quarter. We met all our Greek banks during the quarter on our travels to Greece, and Optima remains our favourite, with one of the highest ROE rates among banks in Europe (24%) and a loan book set to grow by 32% in 2025-26. Furthermore, its EPS is growing by 15%-12%—the fastest in our markets—while the stock trades at 8.3x 2026e P/E. Theon International also performed strongly, up 41% in Q2, on the back of increasing sentiment towards the defence sector and the company’s ability to rapidly expand its backlog and grow sales at 30%+ in 2025, and potentially even in 2026.

Another strong performance came from Moldova, with Purcari Wineries delivering a strong 44% gain this quarter, contributing 1.4% to the fund’s NAV. A long-term holding in our portfolio, Purcari has received an attractive bid due to its leading position as Romania’s number 1 premium wine brand - with a 12% market share - and the largest exporter of Moldovan wine.
The company’s vast portfolio spans 1,450 hectares of premium vineyards across Moldova, Romania, and Bulgaria, with the capacity to produce over 35 million bottles annually. A strategic bid from a Polish FMCG group came at a 49% premium, valuing the stock at 12x earnings—up from a low 8.6x P/E—highlighting the underlying value of profitable, well-positioned companies in the region and crystallising their value for long-term investors like us.

The Turkish holdings underperformed in Q2 2025, posting a 9% gain. Part of our portfolio’s strong performance includes short-term Turkish bonds, some maturing in August 2025, offering yields of 45-49% TRY. One of our top holdings in Turkey, IT company Logo, was up 24%, as the company continues to grow, with  sales up by 11% in real terms, and trading at 6.7x EV/EBITDA. Enka Construction slowed to a 2.4% gain after a strong year-to-date performance, as the stock eased off amid a lower probability of and sentiment towards peace in Ukraine being achieved soon. However, we believe in the company’s strong construction pipeline both in Turkey and abroad, even without Ukrainian projects, with a 32% year-on-year growth in its construction order backlog. We added somewhat to our UW position of Turkish equities in Q2 2025, anticipating a sustained disinflationary trajectory and credible monetary policy following the political turbulence in March and the central bank’s implicit rate hikes to support the currency and reserves. The central bank may warm up to rate cuts in July, which would support Turkish banks and corporates currently struggling in a very high-rate environment.

We remain optimistic and continue to seek the best selection of high-quality stocks demonstrating growth and strong balance sheets. We believe the Balkan region offers a compelling fundamental story at very attractive valuations—20-30% cheaper than both continental Europe and emerging markets—benefitting from the momentum of capital inflows to Europe and emerging markets. The region combines higher growth, significantly lower valuations, and lower trade war and political risks. Moreover, the geopolitical risk premium related to the nearby Ukraine conflict is expected to decline over time, potentially unlocking new opportunities in Ukrainian reconstruction.

East Capital Balkans fund’s 19.3% return in the second quarter reflects our ability to navigate a complex landscape, delivering value through active management. Looking ahead, we are optimistic about key developments in 2025: continued strong recovery and GDP growth, along with increasing inflows to the regions, driven by improved sentiment towards Europe and emerging markets, as well as the potential for a Ukraine peace deal that could enhance stability in Eastern Europe. Moreover, German stimulus is lifting regional GDP, and rising defence spending is boosting defence-related industrials. Despite Türkiye’s challenges, the fund trades at an attractive 9x P/E for 2025, with a 4.4% dividend yield, offering compelling growth potential amid cheap valuations and resilient balance sheets. We remain committed to uncovering high-quality opportunities across this dynamic region.

 

 

Performance in USD net of fees.

This publication is not directed at you if we are prohibited by any law in any jurisdiction from making this information available to you and is not intended for any use that would be contrary to local laws or regulations. Every effort has been made to ensure the accuracy of the information, but it may be based on unaudited or unverified figures or sources. The information should not be used as the sole basis for an investment. Please read the Prospectus and the KID, which are available on the fund page.

Lipper Egle 730X480 3

East Capital Balkans - Winner for the second year in a row of the LSEG Lipper Fund Awards (Europe)

The East Capital Balkans fund has been awarded the LSEG Lipper Fund Award for Europe 2025 (Equity Emerging Markets Europe), celebrating its exceptional performance over the past three and five years.

Geographical Split

Sector Allocation

Largest Holdings

Fund facts

Fund

East Capital Balkans A EUR

ISIN

LU0332316016

Launch date

2014-04-10

Domicile

Luxembourg

Morningstar Rating™ (Total rating)

4

Yearly fee

2.31%

Management fee

1.90%

Benchmark

-

Fund

East Capital Balkans A1 SEK

ISIN

LU1941809938

Launch date

2022-03-31

Domicile

Luxembourg

Morningstar Rating™ (Total rating)

4

Yearly fee

2.35%

Management fee

1.90%

Benchmark

-

Fund

East Capital Balkans R EUR

ISIN

LU0972918535

Launch date

2013-09-30

Domicile

Luxembourg

Morningstar Rating™ (Total rating)

4

Yearly fee

1.70%

Management fee

1.50%

Benchmark

-

Risk indicator

Funds with risk class 6-7 can have sharp decreases or increases in value.

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More information

Reporting of the fund's historical returns does not consider inflation.

Past performance of the A SEK share class prior to 1 October 2013 relates to the Swedish registered fund East Capital Balkans, which from 1 October 2013 is a feeder fund to the A SEK share class.

Past performance of the A1 SEK share class prior to 01.04.2022 relates to the A SEK share class of the Sub-fund whose performance prior to 01.10.2013 relates to the former Swedish registered East Capital Balkans which from 01.10.2013 was a feeder fund to the A SEK share class of the Sub-fund until 31.03.2022.

2022-04-01

The merger of the Funds East Capital Balkan, East Capital New Europe, East Capital Russia and East Capital Eastern Europe with East Capital Balkans, East Capital New Europe, East Capital Russia and East Capital Eastern Europe (respectively) has been carried out in accordance with the submitted merger plan, which was approved by Finansinspektionen (the Swedish Financial Supervisory Authority) on 15 February 2022.

East Capital Balkans, East Capital New Europe, East Capital Russia and East Capital Eastern Europe thus ended on 1 April 2022.

Following the merger, former shareholders in East Capital Balkan, East Capital New Europe, East Capital Russia and East Capital Eastern Europe now own shares in East Capital Balkans, East Capital New Europe, East Capital Russia and East Capital Eastern Europe.

More information about the merger, such as the auditor's opinion on the exchange relationship, can be obtained from the management company East Capital Asset Management S.A. upon request.

Investing through a financial intermediary may impact the investor’s rights to compensation in the event that compensation is paid due to errors or non-compliance.

The Global Industry Classification Standard (“GICS”) was developed by and is the exclusive property and a service mark of MSCI Inc. (“MSCI”) and Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. (“S&P”) and is licensed for use by East Capital. Neither MSCI, S&P nor any third party involved in making or compiling the GICS or any GICS classifications makes any express or implied warranties or representations with respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability and fitness for a particular purpose with respect to any of such standard or classification. Without limiting any of the foregoing, in no event shall MSCI, S&P, any of their affiliates or any third party involved in making or compiling the GICS or any GICS classifications have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.

The MSCI information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Historical data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction. The MSCI information is provided on an “as is” basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the “MSCI Parties”) expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages. (www.mscibarra.com)