Liontrust Russia Class C - Accumulation (GBP)

The Neptune Russia & Greater Russia Fund's official benchmark is the MSCI Russia Large Cap Index. However, in our view, the MSCI Russia 10-40 Index is a more appropriate benchmark as it reflects the investment restrictions of the fund. The MSCI Russia 10-40 Index launched in May 2006 and, therefore, performance prior to this point is shown against the MSCI Russia Large Cap index in the chart to the right. Although the fund has demonstrated periods of outperformance in the past, it has struggled in recent years.

Performance of the Russian stock market has been volatile over the long term. It has tended to exhibit a high degree of correlation to the oil price and tends to be highly sensitive to investor sentiment. It also operates a concentrated portfolio which is a higher risk approach and has a bias towards a small number of large companies.

We expect the fund's performance to deviate from the index at times as it is positioned fairly differently to the wider market. The index is largely dominated by energy and materials businesses, to which the fund has some exposure. However, the fund has greater exposure to technology, industrials and consumer businesses than the market, with the aim of offering investors broader exposure to the Russian economy.

Neptune has a common philosophy across its fund range based on a belief that the world should be viewed at the global industry or sector level. For this fund, research focuses on understanding how global industry trends and economics will influence Russian companies, and which sectors have the greatest potential given the prevailing conditions. The strongest companies within these themes are then selected.

Robin Geffen is supported by a team of economists and analysts whose responsibilities are split by global sectors. Analysts carry out regular detailed reviews of their sectors and the team subsequently take a view on which sectors or industries could be expected to outperform in the future. Individual company analysis involves assessing numerous factors, including company management and business prospects, with the aim of valuing a business.

This fund is typically limited to invest a maximum of 30% in any one sector. Individual stock positions are limited to 10%, but will normally be in the range of 3% to 5%. The fund invests primarily in American Depositary Receipts or Global Depositary Receipts, providing exposure to Russian companies via what is typically a US-listed security. This provides extra liquidity and improvements in reporting standards over locally-listed equities.