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Elena Shaftan

Hearing someone declare their love for the English weather is not something one hears every day. But, given that Elena Shaftan, manager of the Jupiter emerging European opportunities fund grew up in Siberia, her passion for the climate here seems understandable.

She was born in Latvia and moved back and forth to Siberia as a result of her father’s job as a space researcher but from the age of seven she lived permanently in Siberia.

Shaftan says: “Where I grew up was an excellent place. It was a small society where everyone knew each other and it was a very protective society. Despite the cold, we still did a lot outdoors. We were so far away from Moscow that the regime from our perspective was relaxed and we had much more freedom compared with Central Russia. I was a teenage in 1985 when the regime began to crumble and information started to emerge. It was a very exciting time because we could challenge our history teachers and have a debate.”

Following her arrival in the UK 12 years ago to study English, Shaftan worked for a publishing company before joining AIB Govett Asset Management in 1995 where she managed Eastern European equities before moving on to Jupiter in 2000.

She graduated from university as a radio electronic engineer and admits that fund management was not her first career choice.

“I wanted to be a doctor but when I went for medical training at the age of 16 I found that I was fainting. T couldn’t take the gore. What I love about fund management is it is very human.”

Shaftan’s 340m portfolio, in which she herself is an investor, hit the all-important milestone of a three-year track record recently. She has good reason to celebrate as for the period September 23, 2002 to September 19, 2005, the fund has achieved a 230 per cent return, on a bid to bid basis, significantly ahead of the 172 per cent posted by the Nomura Central and Eastern Europe index.

The fund, which is co-managed by Ingrid Kukuljan, is placed top out of 21 funds within the IMA global emerging markets sector and second out of the universe of 2,115 UK authorised investment funds, beaten only by Invesco Perpetual Latin AmericaShaftan, who has managed the fund since day one, admits she does not expect to see the same level of returns over the next 36 months but feels that the fundamentals which have driven performance are still in place. “There are two basic reasons why the markets have done very well. One is that the economies have been growing at a substantially higher rate than Western Europe, which meant that earnings were growing significantly faster as well.

“The second reason is the valuations. But they are not as cheap as they used to be and that is why I cannot promise that in another three years we will be able to match the returns of the past three. But there still is some discount and further opportunities.”

Some clear themes have driven performance, such as the convergence process spurred by EU accession of Central and Eastern European countries and the strong economic recovery in Russia but Shaftan believes her “very conservative investment process” has also allowed her produce decent returns even during difficult market conditions.

She runs a tight portfolio, typically between 30 to 35 stocks. “The universe in which I invest is quite small. If you put everything together, maybe you would have 300 to 350 stocks but when you take out the ones which are either too small or illiquid or for some other reason we cannot invest in them, I am left with around 100 stocks. It is much better if I find a stock I really believe in and put in 3 per cent. Having a 0.5 per cent position is not time well spent. If I were to have 60 holdings, it would almost be covering the whole universe – almost a closet indexing.”

Shaftan seeks out companies which are either “market leaders or a niche players, firms whose position is unassailable, who can defend their market share and margins”.

Profitability and pretty fat margins are other must-haves for Shaftan as is “a high visibility of earnings.” She explains: “I am looking for understandable drivers for earnings growth which make those earnings predictable. I would never make an investment based on a possible event in the future as the event might not happen.”

Management is paramount to Shaftan’s process. “I need to know that the manage-ment is on our side. I hate to be the one to tell the management what they should be doing. If I feel I have to do this, then I should be selling their shares. I will not sit back and hope they get their act together.”

This sentiment mirrors for Shaftan what she finds most difficult about her job – disappointment. “If a company lets you down, say, if the management either lied or misjudged the market. If you are a doctor and you make one mistake then you are a very bad doctor but in this job you make mistakes and you make bad investments and every mistake hurts.” Shaftan is driven by finding the “under-looked company” or discovering “a new angle with an old familiar firm and then seeing it perform.”

After a decade examining and researching Eastern European stocks, Shaftan does not have to endure the same level of Euro-hopping these days as she does not find it as necessary but she still meets firms and management regularly and goes to the regions a couple of times a year, “just to have a feel for what is going on”.

Travel is a major love for Shaftan, with Paris and Milan being two favourites. She feels that growing up in Soviet Russia is a reason for her fondness of travelling. “There were all those places I had read about and had never seen and the likelihood was that I would never get to see them. I missed out on a lot but now Europe is just around the corner and I love weekend European breaks.”

As for her adoptive home in UK, and here love for its weather she says: “I have travelled a lot and the UK is still absolutely my favourite place, it is very cosmopolitan and for a foreigner is a very easy place to live.

Alongside travel, Shaftan’s other great love is dancing, most recently jazz dancing. Of late, she has been taking a break but has plans to get back into her dancing shoes.

Born: August 1970

Lives: Kensington, West London

Education: Riga Aviation University

Career: 1995 – John Govett
2000 – Jupiter Asset Management

Likes: Jazz dancing,walking

Dislikes: snakes

Car: “Taxi! I don’t have a car”

Favourite Book: The Master and Margarita by Mikhail Bulgalov

Favourite album The Best of Barry White

Favourite film: Breakfast at Tiffany’s

Hero: Audrey Hepburn

Life Ambition: To remain happy

Career ambition: “To carry on what I am doing now.”


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