Top 3 Russian ETFs to avoid as Central Bank warns of a liquidity crisis

on Mar 1, 2022
  • The Russian stock market has been closed this week.
  • But Russian ETFs have collapsed to either record or multi-year lows.
  • The Bank of Russia has warned about a liquidity crisis.

Russian equities have been in a strong bearish trend in the past few days as investors assess the impact of sanctions. The Russian ruble has collapsed and the central bank has warned about its ability to mitigate risks. Here are some of the top Russian ETFs to avoid as the current crisis continues.

iShares MSCI Russia ETF 

The iShares MSCI Russia ETF (ERUS) is a leading fund that tracks the biggest Russian companies ranging from banks to technology to energy firms. The ERUS stock price has collapsed to the lowest level since January 2016.

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It has fallen by more than 65% from its all-time high as most of its constituent stocks retreat. At the same time, there are concerns about MSCI, which is considering options for its Russian indices.

ERUS has an expense ratio of 0.57%, which is a bit expensive considering that most ETFs have a ratio of less than 0.20%. Some of its biggest holdings are companies like Gazprom, Lukoil, Sberbank, Norilskiy Nickel, and Tatneft among others. 

VanEck Russia ETF

The VanEck Russia ETF (RSX) is another ETF that gives investors exposure to the Russian market. Like ERUS, the fund tracks some of the biggest publicly traded companies in Russia. It does that by tracking the MVIS Russia Index. 

RSX has a net expense ratio of 0.61%, making it a bit more expensive than ERUS. It has total assets worth over $631 million. While the fund is highly diversified, most of its constituent companies are in the commodities market. They include companies like Gazprom, Norilskiy Nickel, Alrosa, VTB Bank, Transneft, and Yandex.

The RSX stock price has also crashed sharply this week. It has fallen by more than 67% from its all-time high and is trading at an all-time low.

VanEck Russia Small Cap fund

The VanEck Russia Small Cap fund (RSXJ) is another ETF to avoid as the crisis in Russia continues. The fund gives investors access to small cap companies from Russia. It has an expense ratio of 0.75%, making it a highly expensive fund to invest in. It has just $11 million in assets and seeks to track the MVIS Russia Small-Cap index. 

Most of its constituent companies are small caps that are mostly listed in Moscow. Some are listed in the United States. Examples of these constituent companies are Raspadskaya, Sistema, Credit Bank of Moscow, and Aeroflot.

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