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Russian ETFs Reacting To More Government Moves

December 16, 2014 3:29 pm
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The Russian economy is in a downward spiral. A late night 650-basis point rate hike to 17 percent from 10.5 percent by the Russian Central Bank on Monday was the latest move by the country to save its currency. The announcement momentarily halted the freefall in the ruble. However, it was short-lived as the ruble quickly fell 13 percent from its opening price. Tuesday's selloff has the ruble down more than 20 percent over the last week and lower by 56 percent year-to-date.

To add to the chaos, the Russian 10-year local bond, which is the rate the government must pay to borrow money, increased 2 percent to 15.36 percent. The collapse of energy prices along with various sanctions and the plummeting ruble has provided the perfect storm for a meltdown of the Russian economy.

Highlighted below are three Russia ETFs that have been greatly affected by the struggles within the country.

Market Vector Russia

The Market Vector Russia ETF Trust (NYSE: RSX) tracks 49 publicly traded companies that are primarily listed in Russia and generate a majority of their revenue in Russia.

The ETF is distributed across 10 sectors, with energy at 44 percent and materials at 17 percent being the most heavily weighted sectors.

The top individual holdings include:

  • LUKOIL (ADR) (OTC: LUKOY) at 8.5 percent
  • MMC Norilsk Nickel making up 8 percent
  • Gazprom OAO (ADR) (OTC: OGZPY) coming in at 7.7 percent

RSX is down 50 percent year-to-date, 45 percent over the last six months, and is currently sitting at its lowest point since March of 2009. The ETF has an expense ratio of 0.63 percent

Related Link: Economist Says Russian Central Bank's Steps To Slow Deterioration Of Ruble Do Not Support Fundamental Solution

SPDR S&P Russia

The SPDR S&P Russia ETF (NYSE: RBL) is made up of 48 publicly traded Russian companies. The ETF is distributed across 10 sectors as well, with the top two sectors weightings almost identical to that of RSX.

The top individual holdings are similar as well with Gazprom OAO making up 15.8 percent of the ETF, Lukoil with a 13.8 percent holding and MMC Norilsk Nickel rounding out the top three at 6.6 percent.

RBL is down 50 percent year-to-date, 46 percent over the last six months, and is currently sitting at all-time lows. The ETF has an expense ratio of 0.59 percent.

iShares MSCI Russia

The iShares MSCI Russia Capped Index Fund (NYSE: ERUS) provides investors with targeted access to 85 percent of the Russian stock market. The ETF is allocated across seven sectors, with energy at 47 percent and materials at 16 percent as the highest weighted sectors.

The top three of the 23 total holdings include:

  • Gazprom OAO with an 18 percent allocation
  • Lukoil coming in at 12.6 percent
  • SBERBANK RUSSIA (OTC: AKSJF) making up 7.6 percent

ERUS is down 50 percent year-to-date, 45 percent over the last six months, and is currently sitting at an all-time low. The ETF has an expense ratio of 0.61 percent.

The exposure gained through the three Russian ETFs highlighted focuses on the big names as they all have similar top holdings as well as the energy sector. These are two of the areas hit the hardest during the Russian bear market.

Image credit: flowcomm, Flickr

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