The Russia ETF Has Become A Popular Destination For Investors
“As one of four emerging-market nations that make up the vaunted BRIC region, Russia has become a popular destination for investors. Compared to China, Brazil and India it is often viewed as a kid brother just tagging along for the ride. In reality, however, the country was the top performer during the 2009 rally. With strong economic fundamentals and still attractive valuation, it could easily turn the trick again,” David Pett Reports From The Montreal Gazette.
“People have always been very nervous about Russia, which leads to the so-called Russia discount,” said John T. Connor, portfolio manager of the U.S.-listed Third Millennium Russia Fund. “I think a lot of the popular characteristics of corruption and rule of law are simply not factual,” Mr. Connor said. “That discount will moderate and combined with an appreciating ruble. I think there’s tremendous upside.”
Pett goes on to say, “Russia’s top benchmark Micex stock index fell 74% top-to-bottom in just five months during the global financial crisis, the most dramatic collapse of any major index in the world. Since then, it has risen a staggering 175%, outpacing all other BRIC nations, including Brazil, the next-best gainer, which has risen roughly 130% from its low. Even with its impressive gains, the Russian market remains cheap, trading at eight times earnings at the end of 2009 versus 14 times for the other three BRIC nations.”
Patrick Gautier, Paris-based portfolio manager of Europe and Emerging Markets for Sinopia Asset Management, said that is even cheaper than it normally is on a relative basis. He is slightly overweight Russia with a 14% stake in the country, versus 13% for the benchmark MSCI BRIC index. “The Russian market is riskier than other markets, but because it is more volatile, opportunities may occur more often over the short term,” he said. “Buying and selling Russian equities may allow for investors to get more alpha over the long term.”
“In 2010, Russia’s economy is expected to grow in the range of 4% to 6%. That’s not great relative to the 7% expected from India and 9.5% forecast for China, but certainly more robust than prospects for growth in the developed world, including Canada that is expected to expand at a clip of 2.6%. The country’s fiscal position is also sound at a time when sovereign debt risk in Mediterranean Europe threatens to cripple markets. For investors who want to take a broad approach to Russia, there are several Canadian-based mutual funds, including the HSBC BRIC Equity fund and Excel BRIC fund as well as exchange-traded funds such as the Claymore/BNY Mellon BRIC ETF (EEB). In the U.S., the Market Vectors Russia ETF (RSX) offers pure-play exposure to the Russian economy,” Pett Reports.
See More Details: HERE
Here are some more details on the 2 ETFs mentioned in the article:
The investment (EEB) seeks results that correspond to the performance, before fees and expenses, of the Bank of New York BRIC Select ADR index. The fund seeks to replicate the performance of the BNY BRIC index which is comprised of American depositary receipts (“ADRs”) and global depositary receipts (“GDRs”) selected, based on liquidity, from a universe of all listed depositary receipts of companies from Brazil, Russia, India and China currently trading on U.S. exchanges. The fund normally invests at least 90% of total assets in ADRs and GDRs that comprise the index. It is nondiversified.
| TOP 10 HOLDINGS ( 54.10% OF TOTAL ASSETS) |
|
The investment (RSX) seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the DAXglobal® Russia+ Index. The fund invests at least 80% of assets in stocks and Depositary Receipts of publicly traded companies domiciled in Russia. It normally invests at least 95% of assets in securities that comprise the index. The fund is nondiversified.
| TOP 10 HOLDINGS ( 61.60% OF TOTAL ASSETS) |
|
Related posts:
Most Comments