Go East, Young Man!

After outperforming other emerging markets for much of 2008, Eastern European emerging markets have corrected sharply since commodity prices began declining a month ago, says Alec Young, international equity strategist for Standard & Poor's. "While rising incomes and credit growth are fueling strong Russian household consumption, which is supporting service and manufacturing growth, its economy remains too dependent on energy exports, in our view. In addition, slowing growth in the eurozone, a key trading partner, is also weighing on the region's equity markets."

Jan-Wim Derks, portfolio manager for ING Russia, runs a tightly-focused fund; as of its most recent report to investors, the fund had only 36 holdings. The $990-million asset fund is fully invested; cash is less than 1%. So unlike many U.S. equity fund managers who have been upping cash positions to ride out market volatility, ING Russia continues to put all of its assets to work. The top three holdings, as of mid-year, were Sberbank, the largest bank in Russia, and two energy holdings: OAO Gazprom and Lukoil.

All three of those stocks are also among the top ten holdings for Third Millennium Russia. However, the top holding is not on ING Russia's top ten list at all. It is Uralkali, a Russian company specializing in the production of potash and other fertilizers.