Conflict has been good business for some Russia ETFs.
As filings and launches are on the light side this morning, we take a look at the current flashpoint in Russia and how current events are affecting flows into Russia-related ETFs.
Over the weekend, tensions between Russia and Ukraine intensified, with Ukraine mobilizing 15,000 troops in eastern Ukraine.
At the same time, U.S. and European governments reportedly plan to ramp up sanctions against Russia this week, with current sanctions already working to spark a sell-off in Russian equities and weakening the ruble.
Sanctions have also hurt the year-to-date performance of the $1.3 billion Market Vectors Russia ETF (RSX | C-65), the $264.3 million iShares MSCI Russia Capped ETF (ERUS | C-95), the $33.1 million Market Vectors Russia Small-Cap ETF (RSXJ | D-29) and the $19.7 million SPDR S&P Russia ETF (RBL | D-68).
RSXJ, which tracks a market-weighted index of small-cap Russian securities, is leading the pack, down 30.5 percent, while RBL, ERUS and RSX are all down some 25 percent year-to-date.
However, inflows into these ETFs tell a different story. Investors have poured $541.2 million into RSX, $21.3 million into RSXJ and $7.9 million into RBL, year-to-date, according to data compiled by ETF.com Analytics. ERUS was the only ETF showing outflows so far this year—$6.1 million.
In a recent interview with ETF.com, legendary investor Jim Rogers said: “Russia is very, very cheap, and it’s a very neglected stock market with enormous natural resources.”