The biggest U.S. exchange-traded fund tracking Russian stocks is luring the most money since March as investors bet the nation’s standoff with the U.S. and Europe over the Ukraine conflict is easing.

The Market Vectors Russia ETF attracted $199.3 million this month through Aug. 26, data compiled by Bloomberg show. It’s on pace for the biggest monthly increase since investors poured in $573.7 million in March. The inflow five months ago came as Russia annexed the Black Sea peninsula of Crimea, prompting traders looking to bet against the stock market to create new ETF shares that they could in turn sell short. The fund has returned 4.5 percent this month.

Money is coming in now amid signs that tension may be waning in the Ukraine conflict, luring bullish stock buyers. President Vladimir Putin reiterated a pledge yesterday to do all he can to foster peace after meeting with his Ukrainian counterpart Petro Poroshenko at a summit in Belarus.

“Investors are cautiously optimistic as there are talks and there have been no new sanctions on Russia,” Alexander Antipov, head of sales at Veles Capital LLC in Moscow, said by phone yesterday. “Russian equities are very cheap and long-term investors who buy these days expect to make serious profits when the Ukraine crisis is solved and things are back to normal.”

Stock Volatility

Equity investors have endured wide price swings this year amid concern intensifying U.S. and European Union sanctions linked to the Ukraine conflict will hurt growth. While the Micex Index has risen 17 percent from its March 14 low, it is still down 3.7 percent this year and trades at 5.2 times projected 12- month earnings, the cheapest among emerging markets. The gauge’s 90-day historical volatility peaked at 30.75 percent on July 7, the highest since January 2012, data compiled by Bloomberg show.

The Bloomberg Russia-US Equity Index of the most-traded Russian stocks in the U.S. rose 0.4 percent to 88.06 yesterday. Stocks gained as Putin and Ukrainian President Petro Poroshenko finished a meeting in Minsk, Belarus.

Russia “will do everything for this peace process,” Putin told reporters after the talks, while continuing to deny any Russian involvement in a conflict that has already claimed more than 2,000 lives. The talks were “positive,” he said.

Hours after Putin’s comments, new accusations of Russian aggression were already being voiced in Kiev. Russian soldiers have joined rebel fighters in mounting a counterattack, opening a new front against Ukrainian troops, military spokesman Andriy Lysenko said. The U.S. State Department said Russia may be directing the offensive in Donetsk and Luhansk. The claims do not “correspond with reality,” said Putin’s spokesman, Dmitry Peskov.

‘Fundamentally Attractive’

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