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From the Opalesque Team:

In October, SOKOL Russian Equity Opportunity Fund saw the same factors at work that have been determining Russian stocks during the previous months: the international exchanges; slowly growing oil prices (this time to just below $80 per barrel); an appreciating Ruble; and little or none domestic news. Inflation is low due to decreasing energy and import prices, state coffers are filling up again, and foreign policy has been unaffected by frictions for the largest part of the year.

According the managers at SOKOL, the quiet and professional handling of the post-crisis period by the Russian government, of course in collusion with the windfall of rising oil prices, has been globally honored by an almost 78% decrease in Russian sovereign debt insurance costs (CDS prices, YTD) by October 31. This was the world's largest CDS price increase this year, underlining the manager's belief and recommendation: never sell Russia short - or at least not each time some cloud is blocking out the sun.

Thee political situation is even calm to an extent that president Medvedev pushes demands for modernization, transparency and the strengthening of the civil society. Perhaps no bad timing, taking into account the peculiar views on those subjects as held by the ruling elite.

The fund invests in a diversified portfolio of Russian mid cap stocks after careful fundamental analysis of each individual company. The fund does not invest in leverage and short-......................

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