Russia’s Nomos Bank gives advice to retail investors

One of Russia’s leading asset managers, Nomos Bank Asset Management, held a web conference today on the Investfunds portal, Russia’s information source on mutual funds.

During the conference, investors quizzed the firm’s experts on the merits of Russian mutual funds and the best investment options for capital protection.

The question involved the role of ETFs on the Russian market, asset classes worth investing in within a portfolio and the rationale behind choosing a mutual fund over a bank deposit.

In answer to one question, Yury Belonoschenko, CEO at Nomos Bank Asset Management, gave an update on the Russian ETF market. The investment vehicle was approved in Russia only this year, and market participants are still awaiting clarification from the local regulator on how the instrument will work in practice.

For the time being, however, investors can access foreign ETFs through Russian mutual funds, Belonoschenko explained. This, in his opinion, would be a good opportunity for those investors that cannot operate in foreign markets themselves (the majority of Russian retail allocators).

Nomos Bank Asset Management itself offers mutual funds based on foreign ETFs, investing in gold and emerging markets. In the next three-four months, the firm plans to launch more ETF-based mutual funds, which will invest in other types of global assets.

“Either way, a new instrument and new possibilities are a good thing, both for professional market participants and private investment clients,” Belonoschenko concluded.
The conference also revealed many retail investors are unsure about how Russian mutual funds function and the difference between them and bank deposits.

One thing that has stood in the way of the development of Russia’s mutual fund industry since the onset of the financial crisis have been the high rates available on bank deposits, often around 10% per annum.

Banks themselves have not been helping matters by hiking deposit rates. The latest addition to the high-yielding deposits is on offer from the Russian Land Bank, returning as much as 15.55% per annum.

With inflation at 6.3%, retail allocators have seen little sense in going for the less understood and move volatile investment vehicles, such as mutual funds.

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