Vladimir Maslennikov, Vice President, Investment Group QBF, told us about popular investment strategies in Russian realities and gave comments on each of them. We recommend that you familiarize yourself with them and make a choice in accordance with your purpose and terms of investment..
“In the modern domestic capital market, there are many ways to preserve and increase personal savings, but the effectiveness of some of them, for example, bank deposits, is rapidly declining. In my opinion, the greatest dividends today come from stock market products, ”says Vladimir.
1. Federal loan bonds
For those who are looking for a reliable and profitable alternative to a deposit, I would recommend first of all referring to federal loan bonds. These are securities issued by the Ministry of Finance of the Russian Federation. The government assumes the fulfillment of obligations to pay the coupon and refund money under OFZ. Yield of federal loan bonds is higher than maximum interest rates on deposits in banks.
The target return on the strategy built on working with OFZs is 8–9%. An additional advantage of government securities is that they are not subject to income tax coupon income. The investment horizon of portfolios, whose work is based on operations with federal loan bonds, is one year, but it is more efficient to invest in federal loan bonds for a period of three years or more. The indicated investment period can significantly increase the portfolio’s stability against price fluctuations against the background of a possible change in market conditions.
2. REPO with the Central Committee
Another investment tool with the highest level of reliability is repurchase agreements with a central counterparty (a type of transaction in which securities are sold and at the same time an agreement is concluded on their repurchase at a predetermined price). The functions of the Central Counterparty are assumed by the National Clearing Center (part of the Moscow Exchange Group).
The advantage of this instrument is constant profitability: the effectiveness of repos with the Central Committee is practically independent of market fluctuations. Such an investment strategy is suitable for capital owners who want to place funds for a short time. Profit from the results of repurchase agreements with the Central counterparty is accrued daily, so the portfolio will generate income even for several days of operation. Investment strategies based on repurchase agreements with the Central Committee have a target return of 7–8%, which is several times higher than the efficiency of a demand account with a bank.
Bonded portfolios built on working with bonds of the largest Russian companies have a target yield of 9–10%. The tool is suitable for capital owners, the purpose of which is to protect personal savings from external and inflationary risks. Reliability due to investment in fixed income securities.
I note that rapidly developing domestic enterprises in the current economic situation are often more stable than banks from the top 50. At the same time, the target yield of bond portfolios is significantly higher than the efficiency of domestic deposits. As previously indicated, these strategies can bring 9-10% per annum. The investment horizon of portfolios built on work with bonds of Russian companies ranges from 1 year.
High target returns today are characterized by investment portfolios based on operations with shares of the largest Russian companies. They make it possible to profit from the growth of the domestic corporate sector. Modern management companies direct clients’ capital to transactions with securities with stable dividend income and high growth potential..
Due to work with blue chips of the domestic corporate sector, the effectiveness of stock-based strategies is significantly higher than the growth of the Moscow Exchange index. The target return on strategies built on working with stocks with an investment horizon of one year is 15–20%. An increase in the term of capital allocation to three years will also allow minimizing the negative effects of short-term market fluctuations..
5. Shares with dividends
For investors focused on increased returns in the Russian securities market, I recommend turning to portfolios based on transactions with shares with high dividend yield and additional growth potential. The expected return on these strategies today is 20–25% per year..
In my opinion, the ability to control the level of risk will significantly increase the effectiveness of the portfolio. So, if necessary, at times of market fluctuations for a limited period of time, funds can be directed to government and corporate bonds. Redistribution of assets and professionalism of the manager, who will be entrusted with the management of capital, can significantly increase the stability of the portfolio.
In conclusion, I note: all of these investment strategies are available within an individual investment account – a tool that allows you to get tax benefits when working in the stock market. The owner of IIS can use one of two types of tax preferences. The privilege of the first type involves a tax deduction of 13% of the amount of your investment (but not more than 52 thousand rubles per year). The second type of preferences provides for the exemption of profit, which will bring operations with capital, wound up on the account, from income tax.
So, now on the Russian market there are many effective strategies for increasing capital. The main thing is to form the investment portfolio that will best satisfy the individual needs of a particular client. In my opinion, it is more rational to choose the best tools for working with savings together with a reliable partner – a highly qualified financial adviser.
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