On paper, there’s no good reason to invest in Russia right now. The country’s dealing with a collapsed currency, plunging oil prices, recession, conflict in Ukraine, sanctions, and a government that’s hard to predict. The MSCI Russia Index lost almost half its value last year, and those losses could continue in 2015 and even into 2016. On Monday, as fighting in Ukraine intensified, the ruble dropped another 2.3 percent against the dollar, to its lowest level since Dec. 16.
For the intrepid, the thrill-seeking, or the very wealthy, however, Russia still has an appeal. Since August, investors have poured $861 million into the Market Vectors Russia ETF (RSX), the largest U.S.-based Russia fund. “In investing, what is comfortable is rarely profitable,” according to investment firm Research Affiliates in a new analysis. “Investing in Russia now is definitely discomfiting, but it might pay off in the long run.”