JPMorgan Russian Securities – Low valuations and rising yields
Weak oil prices and a deteriorating relationship with the US have weighed on the Russian market for some time. Hopes of a rapprochement with the West in the wake of President Trump’s election have fizzled out. Russia is adjusting to the environment it finds itself in and earnings growth is starting to materialise. Falling inflation has highlighted excessive real interest rates, leaving scope for further interest rate cuts.
Investors have been avoiding Russia and this is evident in a price/forecast earnings ratio for the market close to 5x and a prospective dividend yield of 7% (as at end July 2017).
JRS offers investors a more balanced portfolio than an equivalent ETF and one that draws on the wider pool of stocks that are not constituents of the main indices (see page 9). This gives it the freedom to perform and it is available on an attractive discount.
Growth from a diversified Russian portfolio
JPMorgan Russian Securities aims to provide investors with capital growth from a diversified portfolio of investments primarily in quoted Russian securities or other companies that operate principally in Russia. Up to 10% of the portfolio can be invested in companies located in former republics of the Soviet Union. The portfolio is fairly concentrated (typically between 25 and 50 positions). JRS is permitted to use borrowing but has not done so for some years.
JRS : JPMorgan Russian Securities – Low valuations and rising yields