Turkey weighting soars in Matrix fund

David Thornton, the manager of the Matrix New Europe fund, has upped his Turkey weighting from zero to 25% over the past two months.

David Thornton
David Thornton

Thornton, who until recently had been focused on Russia, may increase the newly created position in Turkey by another 15 percentage points.

“Our stock picks in Russia have done very well, but Turkey is a stronger story,” he says. Turkey’s stock market is currently trading on a price-earnings ratio of 10 and has not yet seen the re-rating many analysts have predicted.

With a 65% allocation, Russia is the largest single country allocation. Although Thornton still favours Russian domestic consumption and infrastructure plays, Turkey is now his preferred investment destination.

Thornton finds some of the most compelling investment opportunities within the consumer-cyclical and industrial-cyclical sectors, including aviation, manufacturing, autos and white goods.

Russia is not as attractive to him as it used to be, even though an oil price around $90 per barrel should benefit the country and could hurt Turkey, which is a major oil importer. (article continues below)

Thornton says valuations in Turkey are more favourable than both in Russia and in the rest of emerging Europe.

The third biggest allocation of the Matrix New Europe fund used to be Poland, but Thornton sold holdings in Poland as he allocated to Turkey.

The $13m (£8.3m) fund has a temporary cash position of 10% but aims to hold a concentrated portfolio of 25 positions.