The Fund had an extraordinary quarter, beating the benchmark significantly, which returned 2.3% for the quarter.

On the 1st of July, the European Council decided to extend the economic sanctions that are currently enforced on Russia for a further six months due to the annexation of Crimea and the Ukrainian conflict. Russia responded by also prolonging its import ban on European food products until December 2017 while easing economic sanctions with Turkey. That decision was a non-event as it was a widely expected outcome.

Economic and market indicators continue to paint a gloomy picture for the Russian economy as the twelve-month Consumer Price Index (CPI) increased ever so slightly to 7.5% from 7.3% in May. There has been a strong decline in fixed investment which contributed to a contraction of 1.2% on a year on year basis. Household demand also continued to fall due to a decrease in income. During the month of May, industry activity was lacklustre and retail trade continued to contract. To make matters worse, the Russian Government’s budget deficit increased due to its shrinking oil revenues driven by the low price of oil. Unemployment currently stands at 5.8% and wages have declined in real terms. The Central Bank of Russia is likely to keep policy rate unchanged at 10.5% during its next meeting on the 29th of July as the Ruble has depreciated heavily and in turn increased domestic prices significantly. Data source: Bloomberg