Russia lagged behind Brazil, India and China last year but Williams de Broe expects it to benefit from factors such as the emergence of a middle-class and strength of the Russian consumer.
It decided to invest in a specialist fund rather than a Bric or global emerging markets fund to ensure maximum exposure to the region.
Deputy fund manager Becky Williams says wages in Russia have increased consistently by 20 per cent a year and believes the region will benefit from consumer demand for goods such as mobile phones.
Williams says Russia, as a producer of oil, will also benefit from high oil prices via its stabilisation fund. Since 2004, revenues from the export duty for oil and tax on oil mining have been used to create a reserve to fund improvements in Russia’s infrastructure and its debt. Williams says this reserve is heading up to $200bn, with high oil prices supporting further increases.
WdB has also added the Resolution Hexam global emerging markets fund to its other two multi-manager funds, assetmaster cautious and assetmaster balanced.
This is to take advantage of the ongoing bull run in commodities, which WdB regards as a long-term theme within emerging markets.
WdB says it likes Resolution Hexam’s concentrated style, where the contribution made by every stock in the portfolio counts towards performance.
Williams says: “We think that boutique managers such as Resolution Hexam focus on the best returns.
“We met managers Bryan Collings and Grant Shotter for a chat and we like their portfolio style. Analysis is at both stock and company level and there are no constraints, only that of Ucits III. The team also had a good track record at Barings.”