Neptune: Russian Stocks Offer Value and Income

For those willing to take on risk, Russian stocks are trading at a 50% discount to other emerging-market stocks and paying out some of the sector's highest dividends

Neptune 15 August, 2014 | 5:16PM
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Morningstar's "Perspectives" series features investment insights from third-party contributors. Here, Robin Geffen, CEO of Neptune Investment Management and fund manager of the Bronze-rated Neptune Russia & Greater Russia fund, discusses his outlook for the country and highlights the key investment themes that he is focusing on.

We are monitoring the situation in Russia extremely closely, and while we have no Russian holdings in our global funds, we continue to find select opportunities for our Russian portfolios. Overall we have increased our holdings in exporters that have less exposure to domestic economic headwinds and that stand to benefit from a weaker ruble. Within our domestic holdings we are focused on sectors and companies that are able to generate strong returns and where structural growth drivers remain intact despite the cyclical slowdown in the economy. This includes sectors like telecoms, IT and food retail. We invest in companies here that have high quality management teams, proven execution track records and benefit from a lack of international competition in their sectors, boosting returns.

We do see a moderate recession in Russia this year, and our current forecast for 2014 Russia GDP growth is -0.3%. This compares with a contraction of -7.8% in 2009. Under current conditions we expect the recession to be short-lived and forecast a return to growth in 2015.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Liontrust Russia A Acc GBP5.28 GBP0.74Rating

About Author

Neptune  is an independent and privately owned investment management company, founded in 2002 by Robin Geffen.

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