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. Last Updated: 07/27/2016

Fund Will Offer Shares Of T-Bills to Expatriates

Individual expatriates looking to place money in the Russian T-bill market will get their chance next month, when a local investment fund begins an ambitious new share offering.


"We are looking to raise $1 million," said Donald Knapp, 27, founder and manager of Red Horizon Partners Ltd., an investment fund targeting Russian financial markets.


During a meeting last Friday, shareholders voted to hold the company's second share offering April 15 to May 31. The company currently has $375,000 in net assets and 41 investors, Knapp said. It raised $360,000 during its first share offering in June to September 1995, falling short of its initial $1 million target.


"Our investors seem to be very happy with the performance so far," said Knapp, a former auditor for Arthur Andersen. He said share values increased by almost 10 percent during the first three months of operation through Dec. 31, 1995, although they subsequently lost about half that gain.


Investment funds usually require a minimum stake of $50,000 to $100,000 and typically target institutional investors. But Knapp says that by requiring only a $5,000 minimum, he is targeting the individual expatriate investor.


"This is a good niche for us. We are focusing on foreigners who are working in Moscow, making good salaries, and have some excess capital to invest," he said.


Knapp said he originally intended to invest in equities, but when it came time to make the first investments last October, he opted to invest solely in treasury bills.


"When we were ready to invest, I felt that the [equity] market was about to stagnate," said Knapp. "Equity markets are usually stagnant in winter, and treasury bills were offering attractive ruble returns at that point."


Despite a decline in T-bill prices for the past two weeks, Knapp said he is confident the market will pick up in April. He said that after April 1, banks will slow the rate at which they are selling T-bills, and bond dealers will increase their purchases of bonds to fulfill their obligations with the Central Bank.