Neptune founder Robin Geffen has increased his holdings in certain sectors in Russia, principally exporters, in the face of the ongoing geopolitical crisis over Ukraine.
Geffen, a long-term bull on Russia, said the firm is still finding “select opportunities” for its Russian portfolios, with exporters in particular standing to gain from a weak ruble.
The European Union and the US have recently introduced further sanctions against Russia, while the Kremlin has banned food imports from the West, as the crisis heats up.
Geffen (pictured) said he expected a moderate recession in Russia and rising food prices as the year continues.
"We do see a moderate recession in Russia this year, and our current forecast for 2014 Russia GDP growth is -0.3%. This compares with a contraction of -7.8% in 2009. Under current conditions we expect the recession to be short-lived and forecast a return to growth in 2015."
He said as far as any trade embargo was concerned, it would become more of a problem if it was still in place by winter.
“During the summer and autumn, Russia tends to experience very moderate food price inflation, often even some slight deflation. So the embargo’s effect will become more of a problem in winter.”
As well as exporters, the manager's flagship £232m Russia & Greater Russia fund is focused on domestic sectors benefiting from structural growth, such as telecoms, IT and food retail.
He said: “We continue to believe that the Russian economy has the potential to grow over the coming years and to offer the basis for strong investment returns. But its ability to fulfil this potential is dependent upon its cooperative integration with the global economy.”
The Russia & Greater Russia fund has shrunk this year, from close to £300m in January to a low of £200m in May, following a difficult three years which have seen it lose investors money.
It has lost 17.9% in the three years to 14 August 2014, with most of the losses coming in the last 12 months as Russia's conflict with Ukraine sparking heavy selling.
