Investors Flee From Russian ETFs

August 07, 2014

Exchange traded funds tracking Russia have seen ten straight weeks of outflows as investors unload their assets, amid the recent wave of sanctions.

Outflows from Russian assets over the last two months topped $400 million this month, wiping out inflows seen in April and May when investors saw the falling value of Russian assets as a buying opportunity, according to data from Markit.

The ten weeks of outflows from Russian ETFs have intensified with the attack on Malaysian Airlines flight MH17, whose downing marked the largest weekly outflow out of Russian ETFs in over six months.

Notably, Source’s RDX UCITS ETF lost over $100 million of assets in July, essentially halving the fund’s aggregate AUM in the last eight weeks.

While U.S. based investors also wasted little time unloading Russian assets - the Market Vectors Russia ETF Trust, the largest Russian focused ETF, saw $90 million of outflows in July.

Russia most recently announced that it will ban or limit food imports from countries that imposed sanctions on Moscow. The countries that have imposed sanctions on Russia for supporting rebels in eastern Ukraine include the U.S., the EU, Canada, Norway and Australia.

A note from Markit said: “The mounting tension in Ukraine has seen harsh measures imposed on high ranking Russian officials and the institutions they control. This, along with far ranging sanctions forbidding the import of technology into the country and blocking their financial institutions from capital markets both in the US and Europe, has seen a dramatic shift in investor sentiment. With no sign of any swift resolution to the situation, we reveal the details of the recent bout of negativity in the country’s assets.”




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