Nevsky Capital Shutting Down – The Full LetterVW Staff
Nevsky Capital explains in its letter, why it is planning to shutdown the Nevsky Fund.
via Zero Hedge
Readers can find the entire PDF below for download – it is a great read!
As the final newsletter for the Nevsky Fund (”the Fund”) the format will, not surprisingly, differ from our usual quarterlies. It will also (I apologize in advance) be somewhat lengthy. In order to make it easy to read (or indeed skip through) it will be split it into the following sections:
- Market commentary
- An explanation as to why we have decided to cease managing the Fund
- Our current view on the global investment outlook
- Nevsky Fund and career performance statistics
1. Market commentary
2015 proved to be a continuation of 2013 and 2014 for emerging market equities, with more red ink and a fall of 15% in USD terms as concerns relating to slowing Chinese growth and falling commodity prices continued to dominate. Developed markets fared better and fell only marginally, by 0.9%, with minor gains or losses in USD terms in most major markets. The Fund achieved a small positive return of 0.4%.
2. Why have Nevsky Capital decided to cease managing the Nevsky Fund?
The decision to stop managing the Fund, after just over fifteen years, has been a very difficult one. This decision has been driven by a growing recent awareness that certain features of the current market environment, which we believe might persist for a considerable period of time, are inconsistent with the achievement of our goal of producing satisfactory risk adjusted absolute returns for you, our clients.
Over our twenty-one year investment career we have always invested using a broadly unchanged process. This process marries the top down forecasting of key macro-economic variables with the bottom up forecasting of company earnings; initially just in Eastern Europe, then across the Emerging World and finally on a global basis from 2003 onwards.
For this process to work we have consistently needed the following criteria to be met:
Unfortunately, global trends over the past couple of years have begun to militate against these preconditions for successful fundamental investing. Namely:
Data quality has deteriorated
The transparency of decision making has also declined
Equity markets are also less transparent
Fat tail risk has also increased
Asia is becoming an increasingly dominant time zone
See full PDF below.
Nevsk Closing full PDF