Investing in the markets of the future

Executive summary

Raiffeisen Zentralbank Österreich (RZB Austria) is a leading Austrian bank with a strong presence throughout Central and Eastern Europe. The asset management subsidiary Raiffeisen Capital Management (RCM) was formed in 1985. Based in Vienna, it is the largest asset management company in Austria, with an overall domestic market share exceeding 20 %, and a 25% share of the Austrian institutional market.

In asset management, Raiffeisen Capital Management concentrates on its core competence areas in which the fund management has especially extensive know-how.

On both the fixed income and the equities side, Raiffeisen can look back on many years of experience in European emerging markets. The additional focus areas in equity fund management include niche products such as the Austrian market and the European growth markets. On the bond side, Raiffeisen is a specialist in managing fixed-income funds as well as funds focusing on European high-yield and corporate bonds. Another increasingly important core competence at RCM is asset allocation and funds of funds.

The company

Tibor Schindler, CEE Chief Strategist

Raiffeisen Zentralbank Österreich AG (RZB) is one of Austria’s leading banks. RZB specialises in commercial and investment banking in Austria and sees itself as the country's corporate finance and export/trade finance bank. RZB also focuses on cash and asset management services.

In addition, the RZB Group is one of the leading financial service providers in Central and Eastern Europe, especially as it was a pioneer among Western banks in most markets in the region. With fifteen "network banks" and one representative office abroad, the RZB group is now active in sixteen Central and Eastern European countries.

Raiffeisen Capital Management was founded in 1985 as the group‘s wholly owned asset management subsidiary. With almost Euro 22 billion (September 2003) in assets, the fund management company is the undisputed market leader in Austria. Raiffeisen currently manages over 200 investment funds, more than two-thirds of them specially designed for institutional investors.

The company’s institutional customer base includes insurance companies, pension funds and banks. Clients include five of the ten largest companies in Austria as wells as 13 of the 19 multi-company pension funds.

Strategic objective

Raiffeisen Capital Investment's main strategic objectives are as follows:

• To focus on the company‘s core competencies in asset management
• To offer a broad, attractive product and service range tailored to customers' needs and to develop offerings on an ongoing basis
• To remain a quality leader in terms of performance, service and security
• To reinforce the leading position in the home market in both the institutional and retail segments
• To expand business activities to foreign markets, focusing on institutional clients

Core competences

In asset management, Raiffeisen focuses on the following core competence areas:

• Eastern European equities and fixed income
• Equities niche products
• European corporate bonds
• Euro zone and international government bonds
• Asset allocation on a regional and sectoral basis
• External fund selection

Investment decisions are based on fundamental research. The fund management team adopts different investment approaches for seperate asset classes. Fixed interest is managed top-down, whereas equities are managed bottom-up. Portfolios are actively managed relative to chosen benchmarks, with risk carefully controlled throughout the investment process.

Those parts of the product range which are not among the company‘s core competences are to be managed by external partners.

Leading in Central and Eastern Europe

Beyond the borders of the domestic market, Raiffeisen Capital Management has developed into a leading player in CEE markets. On both the bonds and the equities side, the company can already look back on many years of experience in European emerging markets, and numerous domestic and international investors have placed their trust in Raiffeisen.

With 24 financial analysts in 9 countries, the Raiffeisen Group has the largest regional research network in all of Central and Eastern Europe. Analysts are in touch with decision-makers in political and economic circles. They conduct company research and interviews with corporate managers. The favorable performance data in international comparision proves the success of this process.

Four ways to invest in the markets of the future

Equity funds

• Raiffeisen Eastern European Equities

This Fund has invested in equities, mostly listed or tradeable securities from Central and Eastern Europe, since February 1994 and focuses in particular on equities from the Czech Republic, Hungary, Poland and Russia. Equities from Croatia, the Baltic States, the Slovak Republic and Slovenia are also included in the investment universe.
The fund was the first Eastern Europe fund which has received a AAA rating in 2002 from Standard & Poors. The rating has been confirmed in 2003.

• Raiffeisen Eurasia Equities

The regional focus is on countries with “convergence perspectives” and a positive potential on development. This means convergence towards Western European standards. This means next EU accession candidates, but also Turkey, Russia as well as China. Despite only fundamentally investments are chosen, there is a higher volatility, but a higher chance of return too.

Bond Funds

• Raiffeisen-Convergence-Bonds

This Fund has invested since 1996 in fixed income securities from transition countries in Central and Eastern Europe. The emphasis is on high-yielding bonds denominated mainly in local as well as hard currencies. As pronounced bets against the benchmark, we can also add hard currency based bonds, issued by Bulgaria, Croatia, Kazakhstan, Russia and – depending on the individual market situation – other Emerging Markets.

• Raiffeisen-EuroVision-Bonds

This Fund invests in local currency government bonds of the most promising EU applicant countries. The main focus is on Poland and Hungary. Consequently, the fund profits the most from the interest rate and monetary convergence of the future EU applicants.

Quality leadership

Raiffeisen Capital Management was the first Austrian fund management company to undergo a rigorous and objective company rating process in which it achieved impressive results. The international rating company RCP awarded RCM a rating of "very good" and also rated the company's future prospects as "positive".

In 2000, Raiffeisen Capital Management was the first asset management company in Austria – and among the first in Europe – to comply with Global Investment Performance Standards (GIPS). GIPS is a set of guidelines intended to protect the interests of investors and fund managers by defining uniform calculation and presentation methods for investment funds.

The quality of Raiffeisen‘s funds' performance can be seen in frequent top rankings in peer group comparisons and general performance rankings in a wide variety of categories.

In individual fund ratings, four of the nine Raiffeisen investment funds rated received the highest possible rating (AAA) from Standard & Poor's (S&P). The overall performance of Raiffeisen fund management even earned the Standard & Poor’s Award for the best licensed fund company in Austria in 2001 and in 2002 the best licensed fund company in Germany in the peer group of smaller companies for am investment horizon of five years.

For more information on Raiffeisen Capital Management please contact

Martin Hager
Tel: +43 1 71707 3615
Fax: +43 1 71707 76 3615
e-mail: martin.hager@rkag.at
Web Site: www.raiffeisencapitalmanagement.com

Raiffeisen Capital Management
Am Stadtpark 9
A-1030 Vienna
Austria

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