(FORTUNE Magazine) – Owning one of the hottest--and thus, perhaps, one of the riskiest--mutual funds specializing in Eastern Europe may have just gotten a little riskier. The reason: The manager who got things off to a fast start has jumped ship--and his replacement has never invested in Russia, where the fund now has nearly 30% of its assets.

The fund is Vontobel Eastern European Equity, which launched in early 1996 and boasted a 78% return in its first year--making it the top performer among funds of any kind ("All's Wild on the Eastern Front," March 31). In early September the manager who racked up those gains, Arpad Pongrancz, left the U.S. company's Zurich offices to join Soros Management in London. Assistant fund manager Istvan Szoke will follow him out the door shortly; he's headed off to start Eastern Heritage Capital, a regional investment group. "It's a hell of a challenge for someone to take [the Vontobel fund] over," comments Szoke. That's because the $205 million fund has slowed down quite a bit: Year-to-date returns through Sept. 5 (Pongrancz's last day) were 25.4%--putting the former No. 1 fund at No. 861.

Enter new manager Luca Parmeggiani, 36, who for the past three years has run funds for Geneva-based banking firm Lombard Odier. His Invest Eastern Europe fund returned 31.1% from its March 1996 inception through Aug. 29, his last day on the job. By comparison, the Nomura Research Institute Eastern European Index--which, like the fund, trades equities in Poland, the Czech Republic, Hungary, and Slovakia--is up 3.5% over that period, according to Micropal.

The risk? This newcomer has "zero experience in Russia," Szoke says. Ridiculous, counters Parmeggiani. He admits that he hasn't actually invested in Eastern Europe's hottest market, but that's only because his fund wasn't allowed to. "It's not that I don't know Russia," he adds, pointing out that he has advised private investors on what to buy in the country. "I've needed to follow Russia, because what impacts Russia, impacts the rest of Eastern Europe." Now, it will also impact whether he can keep Vontobel moving.

--Maria Atanasov