Gazprombank has launched two new funds investing in Russia’s tumbling stock and currency markets.

Private banking giant Gazprombank has launched two new funds investing in Russia’s "discounted" stock and currency markets, at a time when the country is mired in one of the worst diplomatic standoffs with the West since the Cold War.

The two new UCITS funds are focused specifically on Russia’s equity and fixed income markets.

"Despite the current situation in the economy, these Funds were launched with a healthy level of interest,” said Aylin Suntay, chief executive at Gazprombank Asset Management. “With the significant valuation discount in the Russian market, we believe that now is the right time to launch new products and we are confident that they will both prove to be successful investments.”

Money managers believe the Russian stock market is currently heavily discounted given that it has been hit hard by a sell-off in recent months after the country moved to intervene in Ukraine by putting troops into Crimea. The MSCI Russia Index is down 14.2 per cent over the year to date.

The GPB Russia Equities Fund will focus on undervalued and liquid equity securities and is benchmarked against the MSCI Russia 10/40 Net TR USD index.

Meanwhile the GPB Russia Fixed Income Fund invests in sovereign and corporate fixed income instruments denominated in dollars, rubles and other currencies. The Fund’s benchmark is the Euro-Cbonds IG 3Y.

Both funds are domiciled in Luxembourg and the firm has said they will not be investing in the commodities sectors of the economy. The funds were launched with a combined initial investment of $45 million (£27.2 million).

In January this year the firm launched the GPB Emerging Europe Equities Fund.

Gazprombank is one of Russia’s largest asset management businesses, part of Gazprom Bank, which was founded by the world’s largest gas producer and exporter, Gazprom, in 1990.