Top-10 funds of 2012
| Fund | Returns in 2012 (%) |
| MFM Junior Oils Trust | 34.75 |
| HSBC GIF Indian Equity | 30.38 |
| Pictet Russian Equities | 27.57 |
| JPM Russia | 27.42 |
| Stan Life Inv UK Equity Unconstrained | 27.27 |
| Stan Life Inv UK Equity Recovery | 24.79 |
| JPM New Europe | 24.25 |
| Baring Russia | 23.95 |
| Smith & Williamson European Growth | 23.68 |
| FF&P Small Cap UK Equity | 23.61 |
Source: FE Analytics
Our data shows the MSCI Russia index making a stronger start to the year than the rest of the BRIC indices.
BRIC indices in 2012
Source: FE Analytics
Of the 20 top-performing funds of 2012, 11 have a high weighting to the commodity-rich country. Pictet Russian Equities, JPM Russia, JPM New Europe and Baring Russia are all in the top-10 for returns this year. HSBC GIF Russia Equity and HEXAM Emerging Europe have fared well, too.
Obviously, investors who buy into such niche funds need to be able to accept some volatility, and the funds were among the worst performers last year. JPM Russia lost 35.4 per cent, Baring Russia lost 32.3 per cent and Pictet Russian Equities lost 30.6 per cent.
Despite this volatility, the funds are highly rated. The £347.6m Pictet fund has five FE Crowns and has consistently outperformed the MSCI Russia index since its launch in 2008. The $1.2bn JPM Russia fund has four FE Crowns and has returned more than 50 per cent since it launched, at the end of 2005, while the index has returned 46.3 per cent.
Adrian Lowcock, senior adviser at Bestinvest, says investors attracted to the region need to be careful.
"Looking at country-specific funds, Russia is historically cheap, with it yielding the same as the MSCI Emerging Markets Index. However investors should be careful as the region has a history of corruption and they are not treated with the same courtesy as they are in other developing countries and certainly not to the same extent they are in the West," he explained.
"So the region is considered among the more risky of the BRIC nations. If you were to pick one product, we recommend JP Morgan Russian Securities IT."
However, Lowcock thinks that buying a pure Russia fund is too risky, especially when a number of alternatives are available.
"An investor can get increased exposure to Russia through emerging European funds," he said.
"This allows investors to access Russia but also the fund manager can decide when and how to alter their exposure to the region and is not restricted to investing in just one country."
"This gives investors and managers greater flexibility, however emerging European funds are currently dominated by Russia exposure so we would recommend this approach as secondary to a core global emerging markets funds. Of these, we like Jupiter Emerging European."