Barings Emerging Europe Trust Bounces Back From Russia Woes
•February 6, 2026
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Companies Mentioned
Why It Matters
The trust’s turnaround illustrates how proactive geographic diversification can restore value after geopolitical shocks, offering investors a rare exposure to under‑covered emerging‑market regions.
Key Takeaways
- •Russia exposure wiped out ~28% assets.
- •Trust rebranded, added Middle East, Africa.
- •South Africa now 31% of portfolio, drove 26% return.
- •Discount to NAV remains 17%, buybacks ongoing.
- •No borrowing; potential gearing to boost returns.
Pulse Analysis
Barings’ decision to overhaul its Emerging Europe fund after the Russian asset write‑off reflects a broader industry lesson: concentration risk can devastate performance when geopolitical events unfold. By shedding a single‑country exposure that evaporated overnight, the board not only preserved capital but also opened the mandate to a mosaic of markets across the Middle East, Africa and Eastern Europe. This strategic pivot aligns the trust with the broader MSCI Emerging Markets composition, where Europe accounts for roughly a tenth of the index, and positions it to capture growth in regions that are often overlooked by larger asset managers.
The rebalanced portfolio now leans heavily on South Africa, which accounts for 31% of holdings and delivered a 26% annual return, buoyed by gold miners and the tech‑focused Naspers. Eastern European economies, particularly Poland, contribute another 13%, while modest allocations to the United Arab Emirates and Saudi Arabia add regional diversification without over‑weighting oil‑dependent assets. Despite these gains, BEMO trades at a 17% discount to NAV, a gap that buy‑backs aim to narrow. The trust’s zero‑debt stance provides flexibility, and management has hinted at possible gearing to amplify returns if market conditions warrant.
For investors, BEMO offers a unique conduit to emerging‑market opportunities outside the Asia‑centric bias that dominates most funds. Its modest size relative to peers like BlackRock’s Latin America trust raises concerns about scalability, yet the recent continuation vote shows sufficient shareholder support to keep it alive. Should the Ukraine conflict resolve and Russian assets regain value, the fund could capture upside on previously stranded positions. In a landscape where many wealth managers deem sub‑scale trusts expendable, BEMO’s resilience underscores the strategic importance of diversified exposure to Europe, the Middle East and Africa for long‑term portfolio construction.
Barings Emerging Europe trust bounces back from Russia woes
Barings Emerging Europe trust was dealt a hammer blow by Russia’s invasion of Ukraine. Around 28% of its assets were invested in Russia and instantly became worthless. The share price slumped to barely half its early 2022 peak by late 2023.
Yet Barings and the board decided to soldier on. They widened the investment remit to include the Middle East and Africa as well as Eastern Europe and Central Asia, and renamed the trust Barings Emerging EMEA Opportunities (LSE: BEMO). The share price has since climbed back almost to its high of four years ago, although it still trades at a 17% discount to net asset value (NAV). The board has persistently bought back shares, leaving a trust with net assets of £110 million.
How Barings Emerging Europe trust diversified its portfolio
BEMO’s catchment area is a curious collection of markets. Asia accounts for over 80% of the MSCI Emerging Markets index and Latin America is 8%, leaving around 11% to Emerging Europe, Middle East and Africa. Many of these – the Gulf states and the northern half of Eastern Europe – can hardly be called emerging any longer. There is no geographic, political, economic or social homogeneity across the disparate region at all. However, that makes it very well diversified across sectors, companies and opportunities.
South Africa was a key driver of last year’s 26% investment return, making up 31% of the portfolio at year‑end. This included over 5% in each of two gold miners – AngloGold Ashanti and Gold Fields – and over 6% in Naspers, an internet, technology and multimedia investor that indirectly owns 31% of Chinese tech giant Tencent. South African banks have also been good performers, thanks to an improving political and economic backdrop.
Eastern Europe, especially Poland (13% of the portfolio) has been another bright spot, helped by rapid growth that leaves it on a path to overtake much of Western Europe in prosperity. Investments in Hungary and the Czech Republic have also performed well, while Greek banks have benefited from the country’s recovery. With oil prices depressed, relative performance has been helped by avoiding Saudi Aramco. The 22% allocation to Saudi Arabia more broadly held performance back, but not the 10% exposure to the United Arab Emirates.
Turkey, accounting for just 5% of the portfolio, would be an area of opportunity if its government’s economic mismanagement were to improve. The fund is not currently invested in Central Asia, or in Africa other than South Africa. An end to the Ukraine war could be a potential future bonus. While BEMO’s investments in Russia are valued at zero, they could at some point be valuable. The managers have been able to sell a few of them in recent years.
Deserving to survive
Last year’s performance built on a good recovery in 2024. The discount has scope to fall further, which would enhance performance. The shares yield a reasonable 2.5%, with dividends having been raised 5% in 2025. The trust has no borrowings at present, but does not rule out gearing to enhance performance.
BEMO is of a similar size to BlackRock Latin America (LSE: BRLA), which returned 44% in 2025 after five miserable years. It is unfortunate that both trusts are in danger of disappearing as a result of being regarded as “sub‑scale” by the big wealth managers. While BEMO passed a continuation vote in October, 33% of votes cast were against the resolution.
A wind‑up of either trust would leave their region unrepresented except as an after‑thought by the emerging‑markets generalists that are heavily focused on Asia. The last year has shown that this would be a terrible mistake; there is every chance that these two neglected regions will outperform Asia over the next few years. Both trusts deserve to be at least twice their current size.
This article was first published in MoneyWeek's magazine.
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