Why it Pays to Go Active When Investing in Russia

Morningstar analyst Monika Dutt takes a look at the performance of active and passive funds investing in Russia equities

Monika Dutt 21 February, 2018 | 11:23AM
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Russian stocks have become compelling for many investors, owing to their low valuations. The forward price-to-earnings ratio of the MSCI Russia Index is currently around 6x compared to 13x for the broad MSCI Emerging Markets Index.

Valuations have been depressed for a host of reasons, ranging from weaker commodity prices, Western sanctions resulting from the annexation of Crimea, ageing demographics, and poor corporate governance standards among state-owned enterprises. Despite these risks, contrarians argue that Russian equities now offer a compelling value proposition that is hard to ignore.

Russia Funds Covered by Analysts

At the end of 2017, there were 64 funds available for sale in Europe in the Morningstar Russia Equity category, with consolidated assets under management of approximately €9.5 billion. Around €8 billion were invested in 53 active funds, with the remainder in 11 passive offerings.

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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
BNP Paribas Russia Eq Privl Cap200.64 EUR0.37Rating
HSBC GIF Russia Equity AC10.05 USD0.05Rating
JPM Russia A (acc) USD17.63 USD0.42Rating
Liontrust Russia A Acc GBP5.70 GBP-0.09Rating
Russian Prosperity Fund A311.60 USD-8.17Rating

About Author

Monika Dutt  is a Passive Strategies Research Analyst for Morningstar Europe