Winston Churchill described Russia as a riddle wrapped in a mystery inside an enigma. And some investors still claim that Eastern Europe's biggest market is unfathomable and probably best avoided. They may be right. But to do so would be to ignore one of the four pillars of the emerging Bric markets – Brazil, Russia, India and China.
Over the past 11 years, China has risen around 100 per cent; India has gone up 260 per cent and Brazil has jumped over 300 per cent. And Russia's RTS Index has risen from 179 points to 2,087 points – over 1,000 per cent.
Some argue that the rise of the Russian market is down to oil and gas exports. But the wealth so created is filtering down to consumers, and the upshot is a growing, cash-rich middle class ready to unleash its roubles. The standard of living of Russian consumers is not that far behind those in the US and the UK. So it was not surprising when PepsiCo made a bold bet on the Russian drinks market last year, snapping up a large chunk of dairy and fruit juice company Wimm-Bill-Dann.
For private investors, investing in the Russian market is difficult without a fund manager, such as JP Morgan Russian Securities Investment Trust; iShares Eastern Europe 10/40 ETF; and Hexam Emerging Europe Fund.
DIY investors may be interested in the growing crop of Russian firms quoted, or about to be, on more accessible exchanges – such as VimpelCom, on the New York Stock Exchange. Vimpel originally provided wireless telecom services in Russia. It has recently developed a taste for overseas acquisitions, including operators in Kazakhstan and Ukraine. Its latest $6bn spending spree targeting Wind Telecom would create the world's fifth-largest mobile operator, with more than 173 million subscribers.
Russian banks may also be worth considering. VTB bank, formerly Vneshtorgbank, is involved in corporate, investment and retail banking. It is listed in London, and reported record half-year profits in September. And if all goes well, Nomos Bank will soon be tapping UK investors for cash when it lists its Global Depository Receipts here. However, there are plenty of Russian firms already listed in London, such as oil explorers Rosneft and Lukoil, gas producer Novatek and steelmakers NLMK, Magnitogorsk, Evraz and Severstal.
But don't stuff your portfolio with commodity-related issues, when the purpose is to build a well-rounded portfolio, tapping into the rising wealth of Russian consumers. So what could be better than X5 Retail, Russia's biggest food retailer by revenue? It has reported a 24 per cent jump in annual sales and a 22 per cent rise in customer numbers.
And there's nothing mysterious about any of these numbers. They are a testament to the fact that Russians are getting wealthier.