She says the region offers cheap assets at appealing valuations. Economic recovery means the macro picture in the region looks bright, with GDP growth turning a corner, Rubinstein says.
"Companies that we speak to are increasingly optimistic. Added to that, interest rates are historically low, and there is a powerful base effect, certainly in the consumer sector, as consumer spending resumes and confidence returns across the region."
The question for investors is whether they ought to shift some of their European exposure eastwards as a result.
Looking at the MSCI indices there are big performance differences between developed and emerging European markets. The MSCI EM Europe Index returned 80.49 per cent over a one year period to 22 March 2010. This is compared to the MSCI Europe Index which returned 50.57 per cent over the same period.
Volatility was also better in the MSCI EM Europe Index; over a one year to 28 February 2010 the index had a risk score of 16.8 per cent compared to the MSCI Europe index which had a risk score of 29.5 per cent.
The MSCI EM Europe index includes five countries – Czech Republic, Hungary, Poland, Russia and Turkey. Financial Express data suggests there are three IMA funds with exposure to these countries as shown below:
Fund, index returns over respective periods
| Fund | 1-mth |
3-mth |
6-mth |
1-yr |
3-yr | 5-yr |
10-yr |
| Aberdeen European Frontiers TR in GB |
4.96 | 7.40 | 18.71 |
74.78 |
-11.22 |
73.48 | - |
| Invesco Perp Emerging European TR in GB |
6.96 | 13.01 | 25.78 | 97.02 | - | - | - |
| JPM New Europe TR in GB |
6.45 | 13.97 | 28.95 | 119.06 | 20.51 | 141.48 | 249.80 |
| Index MSCI EM Europe TR |
4.21 |
3.08 | 11.63 | 80.49 | -20.71 | 52.91 | 137.12 |
| Index MSCI Europe TR |
4.90 | 3.20 | 6.16 | 50.57 | -17.92 |
20.98 | -3.16 |
The MSCI Europe Index includes 16 countries, these are: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and UK.
Data suggests there are four IMA funds with exposure to all 16 countries as shown in the below table:
Fund, index returns over respective periods
| Fund | 1-mth | 3-mth |
6-mth | 1-yr | 3-yr | 5-yr | 10-yr |
| Family Childs Trust Fund TR in GB |
5.69 | 6.62 | 9.50 |
40.47 | -3.99 | - | - |
| JPM Institutional Continental Europe TR in GB |
6.12 | 2.30 | 3.30 | 45.46 | -3.37 | 50.10 | 35.54 |
| Lazard European Smaller Companies TR in GB |
6.54 | 9.77 | 9.83 | 59.18 | -12.44 | - | - |
| Index MSCI EM Eastern Europe TR |
4.56 | 3.23 | 11.64 | 75.40 | -26.13 | 46.12 | 148.49 |
| Index MSCI Europe TR |
4.90 | 3.20 | 6.16 | 50.57 | -17.92 | 20.98 | -3.16 |
| New Star European Portfolio TR in GB |
5.92 |
5.06 | 6.92 | 41.97 | -2.50 | 44.23 | 29.75 |
Gordon Brown, co-manager of the Baillie Gifford Emerging Markets Bond fund and a Trustnet Alpha Manager says he believes there are some countries in Emerging Europe which are in better shape than some in developed Europe.
He says Poland and Turkey stand out as countries that are likely to grow the strongest.
"Poland is quite a closed economy and managed to avoid the recession through a combination of good luck, having eased fiscal policy just before the crisis, and the fact it is a closed economy so it’s not that dependant on exports," he says.
"During the recession household consumption held up relatively well. It went into the crisis in a strong position and emerged in a strong position, which is a good base to build off so it looks like growth should be 3 per cent or higher this year."
Brown says Turkey has had a shallow recession and the crisis gave the country's central bank the opportunity to cut interest rates aggressively.
"These are now at an all time low of 6.5 per cent. With the combination or lower interest rates, we think they will continue to recover this year, with 4 per cent growth."
Brown says the longer term story for investing in Emerging Europe is still compelling.
"From an investors stand-point, I think the Emerging label will fade gradually as investors recognise the likes of Poland and Turkey are actually in a much stronger position than some of their developed market peers.
"I do think that given the amount of fiscal tightening that will have to happen in some of the southern European countries, they are going to struggle for the next years.You can never say that Emerging Europe countries will not get into trouble, but it seems a lot less likely and again you would expect that to be reflected in the relative asset prices."