Out of all BRIC countries Russia presents an unbeatable growth opportunity. The Russian analog of Dow Jones, the RTS index, is up 300% from its lows a year ago, which is more than any other BRIC country was able to achieve. This comes due to a higher risk in the youngest of the four economies.

 

Russian economy is dominated by commodities as oil, natural gas, metals, and timber account for more than 80% of Russian exports abroad.  Since 2003, however, exports of natural resources decreased in importance as the internal market started to strengthen. Additionally, significant effort has been made to diversify the country's economy into non-commodity sectors, such as telecommunications and nanotechnologies. Russian currency, the Ruble, has been troubled by the 2008 crisis, but stabilized after the oil prices stopped falling.

According to Bank of America's recent report, Russia’s economy is poised for the "biggest bounce" in the world this year as companies rebuild stocks and resurgent consumer demand boosts output.  The Bank's analysts raised expectations for Russia's 2010 GDP from 5% to 7%. Only in the first quarter the country’s GDP already gained 6.5% and inflation is slows down to 6%, the report says.

 

 

Market Vectors Russia ETF (ticker - RSX) is the oldest and most traded ETF on the market. The fund's goal is to replicate the DAXglobal® Russia+ Index by investing at least 80% of assets in stocks and Depositary Receipts of Russian publicly traded companies. It normally invests at least 95% of assets in securities that comprise the index. The ETF can by well used by those, who want to invest in Russian stock market without actually leaving the US domain.

CurrencyShares Russian Ruble Trust (ticker - XRU) tries to replicate, net of expenses, the movements of Russian Ruble relative to US Dollar. The price of this ETF does not match the exchange price of the Ruble, but the variations do. Even though one can use this ETF in a traditional sense making bets on Russian currency, its better use is to hedge your exposure to Ruble if you are invested in Russian assets such as RSX or other Russian stocks.

The SPDR S&P Russia ETF (ticker - RBL) is the youngest ETF of the Russian family. RBL will seek to track the performance of S&P Russia Capped BMI Index, a float adjusted market cap-weighted benchmark consisting of Russian publicly-traded companies. Currently traded at very low volumes, the fund quickly gains more exposure, and is expected to directly compete with the major player RSX.

 

At the time of writing the author had no position in any of the securities mentioned.

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