Two Russia ETFs: Do We Need Both?

The SPDR S&P Russia ETF (NYSE: RBL) made its debut last Thursday becoming the first rival to the Market Vectors Russia ETF (NYSE: RSX), one of the most popular and best performing emerging markets ETFs of the past year.

Choice is usually a good thing for investors, but when it comes to Russia, there may not be a need for two country-specific ETFs. Yes, Russia is the "R" in the BRIC acronym, but the Russian economy is not nearly as diverse as Brazil, China or India.

All of those countries have multiple ETFs trading on U.S. exchanges and their numbers are steadily growing, but it may be a long time before we see another Russia-specific ETF. Consider this: Brazil is a more diverse economy than Russia and there are only three straight, non-leveraged bullish ETFs tracking Brazilian equities, one of which is less than a month old.

The Russian economy is arguably a one-trick pony. The one trick being energy and natural resources. As such, RSX has weight of over 48% to the energy sector. RBL follows suit at over 49%. Gazprom accounts for almost 19% of RBL's weight and almost 9% of RSX, so there is at least one difference between the two ETFs.

RBL has a slightly lower expense ratio, but not really enough of a difference to make it worth your while to dump RSX and run to RBL today.

The Professor predicts that RBL will likely thrive due to State Street's (NYSE: STT) marketing efforts. (State Street issues the SPDRs ETFs.) In addition, investors may be attracted to the new kid on the block, but sometimes it's best to stick with the tried and true and that would be RSX in this case.