Mounting tensions on its borders with Ukraine, sanctions imposed by the U.S. and the European Union and a roller-coaster stock index: Russia may not be the first place you would think about for investment, but one fund manager has told CNBC that investors should look again at the country.
"While the short term can look messy and scary to investors, the typical extreme valuation discounts provide the opportunity to outperform over time," Jesse Sherman, a portfolio manager at Renaissance Asset Managers, said via email.
Russian blue-chip stocks on its Micex Index rose 10 percent in the month of May with investors seemingly overlooking the skirmishes between Ukrainian and pro-Russian rebels in the east. This followed a 13 percent drop for the bourse during February at the height of the tensions, when Russia annexed the Crimea region of Ukraine.
At the beginning of May, Russia was trading at price to book value - an important metric used by traders to gauge equity prices - of 0.5, according to Sherman, with a 60 percent discount to the wider MSCI emerging market index, Sherman added.
This was similar to levels not seen since 2009 and clearly presenting a compelling investment opportunity for the long term, he said. Even now, after a 20 percent stock market rise since March, Russia remains at a 57 percent discount to the MSCI index, he added.
"While we have seen strong performance in many stocks in the investment universe January prices have yet to be reached," Sherman said.