How to invest in the MOEX Russia Index
Investing in the MOEX Russia Index could be the right option for you. On this page, we’ll walk you through the many different ways you can invest in the MOEX Russia Index, and the pros and cons of each investment method available to you.
What is the MOEX Russia Index?
The MOEX Russia Index is the benchmark ruble-denominated index of the Russian stock market, with the other notable Russian index being the RTS Index. Typically, the MOEX is more popular among Russians and the RTS is preferred by foreign investors. The MOEX consists of the largest and most liquid Russian companies from 10 different industries, all of them trading on the Moscow Stock Exchange.
Is it a good investment?
This depends; the MOEX index can be a good investment, depending on your specific goals. Russia’s economy offers numerous prominent businesses, including a number of big players within the country’s huge oil and gas industry. On the other hand, when investing in the MOEX index you’ll need to decide your comfort level when it comes to buying shares of state-owned companies, as well as trading in a ruble-denominated market as opposed to those with more commonly used currencies.
You should also always keep in mind that all market indices risk severe damage when a bear market occurs, as these environments tend to cause stocks to plummet across the board. So if you’re going to invest in the MOEX Russia Index, you’ll want to ensure the Russian economy is looking bullish or be confident that an upturn is around the corner.
How do I invest in the MOEX Russia Index?
Here are three steps you should follow when investing in the MOEX Russia Index:
- Choose an investment type
- Use our top tips to succeed
- Choose a platform to invest with
1. Choose investment type
To find the best investment strategy for your own personal investing goals, consider factors such as the relative size of transaction fees for each investment method, as well as the level of customer service that you want when investing. Generally the more tailored each option is to individual investors, the higher the fees will be. Here are some of the most popular ways to invest in the MOEX Russia Index:
An exchange-traded fund (ETF) is an investment fund that is able to be traded on a stock exchange during regular stock market hours, in a similar way to individual stocks. ETFs are typically composed of a group of different assets at once, such as a collection of bonds or commodities, and as such they can also be structured to match the performance of stock indices such as the MOEX Russia Index. A MOEX Russia Index ETF gives you access to a highly diversified batch of stocks, without you needing to pay heavy transaction or management fees.
The downside of buying an ETF is that you end up holding both the best and worst performing stocks listed on a given index. As a result, while you do lower your risk through diversification, you also dilute your gains compared to buying a smaller group of big winners. More aggressive investors might thus favour the next investment method on our list.
If you want to focus on the top-performing stocks on the MOEX Russia Index rather than committing to the entire index, you can buy each of the stocks tracked by the index in separate trades instead. This allows you to evaluate each stock as you go, then trim your holdings until you own only the top-performing MOEX Russia Index stocks.
That said, if you make dozens of individual trades to buy all of those individual stocks, then a bunch more to pare down to a smaller number of leaders, you’ll be spending a lot of time and money on all of those transactions.
A mutual fund is an investment fund run by a professional money manager, which investors can buy through either a broker or the company that administers the fund. The money manager pools money from thousands of different investors, then invests all of that capital into different assets, aiming to create strong returns for everyone contributing to the fund. A MOEX Russia Index mutual fund (also called an index fund) allows you to invest in all of the MOEX Russia Index’s stocks at once, which lowers your risk level since you’re holding a large, diversified batch of stocks.
However, there are downsides to mutual funds when compared to more easily-tradable ETFs. Mutual funds can only be bought at the end of the stock market’s trading day, not during regular stock market trading hours, and on top of this mutual funds attract higher fees than ETFs. So if you’re going to invest in a MOEX Russia Index mutual fund, it might make sense to try and buy and hold for a longer period of time, since a mutual fund is both more difficult and more expensive to trade than an ETF.
2. Use our top tips to be a successful investor
Before you invest in the MOEX Russia Index, we recommend that you review our top investment tips:
- Do your research. Take the time to consider all the pros and cons of investing in the MOEX Russia Index before putting any of your money into it. Once you’ve made your decision, build a smart investment plan, which will improve your chances of success. The more prepared you are, the better equipped you’ll be to keep emotions such as fear and greed in check, so they don’t cloud your judgment if and when the market becomes volatile.
- Set a budget. The budget you set should account for your own level of risk tolerance, as well as how much money you can afford to lose. It is important to set and keep to a budget, as if you let your losses escalate you could hurt your confidence and struggle to preserve the investment capital you’ll need for future trades.
- Select the right platform. Figure out your specific investment goals before you start your search, so you’ll know what you’re looking for ahead of time. While one investor might choose a platform based entirely on the size of its transaction fees, another might focus more on the quantity and quality of investment advice they can get. Different options work best for different people, so be sure to research your approach thoroughly.
- Grow your investments gradually. As a beginner investor, you should start by investing a smaller amount of money. That way if you make a mistake due to inexperience, it won’t hurt your ability to make future trades or pay for necessary expenses. You can always ramp up the size of your bets as you gain experience and expertise as an investor.
- Think long-term. To succeed long-term, you can attempt to buy and hold a mutual fund related to the MOEX Russia Index, with an eye on landing bigger gains. Even if engaging in shorter-term trading with ETFs, you should always keep in mind your long-term goals you’re looking to achieve. When keeping your investment for the long term, make sure you analyse market conditions to make sure a bear market hasn’t set in, because indices tend to fall in value considerably when that happens.
3. Choose a platform to invest with
If you want to invest in the MOEX Russia Index, here are some of the best options in terms of investment platforms at your disposal:
- Brokers & trading platforms. A broker offers online tools that allow you to invest in the MOEX Russia Index quickly, easily, and inexpensively. While they offer convenience, online brokers don’t usually provide much in the way of in-depth investment advice, though. If you’re looking for more immersive investing advice to guide your decisions, consider a different route.
- Robo advisors. Robo advisors are algorithm-powered trading platforms which execute trades automatically. Some robo advisors will allow you to discuss your investment strategy with a human being, who can help you craft a strategy and programme the robot to trade according to your given strategy. Combines with the relatively low trading fees charged by robo advisor platforms, and you have a viable investing option for many investors. However, a robo advisor still doesn’t offer as hands-on an investing approach as a dedicated financial advisor does.
- Financial advisors. Financial advisors offer the most investment advice to investors, but these services come at a premium. They’ll go over your financial goals with you, walk you through lots of different investment options, and help you meet your goals. The extra charges that come with this level of service and guidance can sometimes be worth it given the expertise investors can gain access to. But this is mainly the case if you’re considering a complex investment strategy. As investing in the MOEX Russia Index is fairly simple, choosing a financial advisor probably isn’t worth the expense in this case.
- Banks. Investing in the MOEX Russia Index with your bank gives you the convenience of having all of your financial instruments in one place. But, offsetting this convenience, banks usually charge high fees. It is also worth noting that these high fees come without the same provision of customer service that top financial advisors offer. So other than the convenience factor, banks don’t offer many advantages over other investment strategies.
Here’s a list of our top 3 recommended brokers to invest in MOEX Russia ETFs:
What should I do now?
Ready to invest in the MOEX Russia Index? Great! Just log into your online broker’s website, pick the investment asset you want to use to buy into the MOEX Russia Index, then click buy. Once you’re invested, keep tracking your investment, so you can be prepared to change course if the market gets ugly.
Try some of our investment courses for beginners
Not yet ready to invest in MOEX? That’s ok too! Improve your investing skills by reading our easy-to-follow educational investing courses and news updates, here at Invezz.com.