The Eastern European Equity Fund filed a revised prospectus on May 7, 2012: it changed its investment objective from investing 80 percent of its funds into Eastern European countries to investing 80 percent in European countries, east and west, north and south. It’s an interesting move for the fund, which has been highly rated but has just $25.1 million in assets. Many investors were part of the broad Polish community here in Chicago who were hoping to play on progress in their homeland.
The Warsaw Stock Exchange is reasonably good sized, with a total market capitalization of about €125 billion. so you’d think there would be enough companies to invest in. Nevertheless, the Eastern European Equity Fund was already heavily weighted toward Russia rather than other places in Eastern Europe.
Of course, with all of the problems in Europe these days, more and more markets are looking like developed nations. There are bargains to be had, although it’s still not clear with European investments will pay off and which will go even lower – and that is the very nature of risk.
For mutual funds investors, remember to keep an eye on the funds that you invest in. It’s not unusual for them to change investment objectives every so slightly – but enough that a fund may no longer offer the diversification benefits that you thought you were getting.
