According to a report published by Reuters yesterday, private equity funds are starting to catch the scent of Russia, and the hunt for bargains has begun.
Spurred by news of recent Russian acquisitions by such corporate giants as General Electric
Meanwhile, consumer brands like Yum!'s
On the other hand, a true Fool is more likely asking: "Forget about the corporate vultures. How do I get a piece of the action?" Excellent question.
First off, forget the usual suspects. Sure, with valuations far below their Western peers, Russia's oil giants look ripe for the picking. But as anyone who's been following the YUKOS saga can tell you, Vladimir Putin isn't keen on the idea of letting Russia's crown jewels escape Kremlin control. So while it's true that you can invest on your own in companies like Gazprom (Pink Sheets: OGZPF), Tatneft
It seems much more likely that foreign private equity buyers will focus their efforts on companies the Kremlin obsesses over a bit less -- less liquid, usually non-ADR-listed companies trading primarily on the Russian Trading System (RTS) stock exchange. And how do you do that? By buying into a mutual fund that knows how to make such investments. I've identified four such funds, including two that rate highly with mutual fund monitor Morningstar
If you go that route, however, remember to bring your wallet -- because these companies don't come cheap. Both of the Morningstar-rated funds charge a 5.75% front load. And even after you're in, they charge hefty expense ratios: 2.75% for Third Millennium; 2.01% for ING.
One more caveat, though: Whatever Russia's prospects, no Russian-focused funds have yet met the demanding performance standards required for inclusion as Motley Fool Champion Funds newsletter recommendations.
If you're investing in funds and want to keep your costs as low as your prospects are high, it's worth first examining the funds that have earned the Shannon Zimmerman seal of approval -- and are walloping the market by a 2-to-1 margin. Want to know what they are? Just click here and we'll show you how to find out, with a free trial subscription to Motley Fool Champion Funds.
Fool contributor Rich Smith does not own shares of any company named above.