Betting Big on Eastern Europe's Emergence

The emergence of China and India on the world's economic stage may be overshadowing Eastern Europe's long-awaited coming-out party, but the owners of Eastern European mutual funds won't get too much sympathy.

Despite Wednesday's drubbing of Russia-heavy funds -- set off in part by wireless provider Vimpel Communications' (VIP Quote) plunge following its admission it may face a hefty tax bill -- Eastern European stocks have produced mind-boggling returns over the past two years, far outpacing those in the so-called developed nations of the world.

Guenter Faschang's (VEEEX Quote)Eastern European Equity fund, for example, is up 43% this year, after a 50% gain in 2003. Faschang says the fund's fantastic performance is a direct result of "euro-convergence" dynamics associated with eight Eastern and Central European nations joining the European Union this year. ...