Insparo Asset Management has predicted a surge in frontier market investment from Russia’s high net worth investor base, as investors look to less correlated investments.

Insparo put forward these views at the Modern Wealth Management Forum in Moscow on 31st March. Insparo was invited to speak on the challenges facing institutional investors in the region, and the opportunities it sees. The firm believes that diversification is vital for Russian investors.

Jamie Allsopp, fund manager at Insparo, said: “The economic downturn represents an unprecedented challenge for Russia’s wealth industry, and many of the old investment rules that it has relied on no longer apply. HNWIs are discovering that they need to diversify their strategies, and look at opportunities in less traditional sectors. The HNWIs that were able to retain their wealth did so by adapting their investment philosophy. As a result, what we are seeing in the Russian market is the emergence of a new breed of sophisticated, risk savvy investors.”

Insparo’s US$180 million Africa & Middle East Fund returned 31.4% in 2009, significantly outperforming the MSCI Frontier Markets Index, which returned 10% over the same period. The fund has already returned an estimated 7.5% for the first quarter of 2010.

“The returns available through frontier markets are there for all to see, and the investors who have adopted a more adventurous attitude toward their risk/return profiles are being rewarded. We have seen a major uptick in interest in frontier market investments from this kind of investor, and we expect to see many more investors following their lead. If the number of enquiries we have had following the conference is anything to go by, we may be about to witness something of a sea change in investment tactics among Russia’s wealth community.”