Russian ETFs can be used to diversify a portfolio needing some international exposure. They can also hedge any country-specific risk to Russian investments like changes to the law. They can even be used as a currency or interest rate play on the Ruble.
Following Russia's military assault on the neighboring nation of Ukraine in late February, the U.S. and other nations have blocked many of Russia's largest banks and enterprises, including energy giant Gazprom, from their financial systems and markets.
One of the best advantages of ETFs is the ability to enter certain markets (like Russia) without loading up on equities or battling index basket pricing. Instead, you can get instant exposure to Russian markets with one easy transaction. So for those who have a desire to invest in Russia, an ETF might make sense.
There aren't a lot of Russian funds to choose from. But this list may grow over the years as foreign ETFs gain popularity. And while this list of Russia ETFs is short, you can consider BRIC ETFs for exposure to Russia as well.
- Russian ETFs can be used to diversify, hedge specific risks, or as a currency or interest rate play on the Ruble.
- One of the best advantages of ETFs is the ability to enter certain markets (like Russia) without loading up on equities or battling index basket pricing.
- Be extra careful with triple leveraged ETFs (RUSL and RUSS). These are more for advanced traders with complex investing strategies.
- You can also consider BRIC ETFs. These not only include Russian assets and ETPs, but Brazil, China, and India as well.
List of Russian ETFs
BlackRock announced that it would no longer issue new share of its ERUS ETF as a result of U.S. sanctions on Russian banks, corporations, and securities. Existing shares still trade on the secondary market, but the firm warned investors that "ERUS may not meet its investment objective, may experience increased tracking error, may experience significant premiums or discounts to its net asset value (NAV), and/or have bid-ask spreads wider than its historical average."
- ERUS: iShares MSCI Russia Capped Index Fund
- RSX: Market Vectors Russia ETF
- RSXJ: Market Vectors Russia Small-Cap ETF
- RUSL: Direxion Daily Russia Bull 2x Shares ETF
This should have you covered for any investing strategy you want to utilize with Russian ETFs.
Also, take note that two of the funds on this list are triple-leveraged ETFs: RUSL and RUSS. And of those two funds, one is also an inverse (short) fund: RUSS. Be extra careful with those funds; they are not for those with weak stomachs. They are more for advanced traders with complex investing strategies.
You can also consider BRIC ETFs. These not only include Russian assets and ETPs, but Brazil, China, and India as well. The BRIC region covers Brazil, Russia, India, and China. While there are specific ETFs for each of these countries, BRIC ETFs have become popular over the years.
BRIC investing originated because the four countries were similar in size and economic status and considered to be emerging markets. That has changed over the years. But is still a popular grouping for investors. This is especially true for ETF investors.
If you want to see if BRIC ETFs are a good fit for your investing strategy, here are the funds you should research:
- BIK: SPDR S&P BRIC 40 ETF
- BKF: iShares MSCI BRIC Index ETF
The Bottom Line
And as with any investment, make sure you thoroughly research any financial asset before making any trades (long or short). This is true of mutual funds, a company stock, an ETF, or otherwise. Conduct your due diligence and watch how these funds react to different market conditions. Take a look under the hood and see what is in the funds. If you have any concerns, make sure you consult a professional.
ETFs have many advantages. But they have many disadvantages as well. This is the case for any investment. So, it is very important to understand the investment vehicle before you trade it. But, once you have a full understanding of these ETFs, you can consider adding any or all to your portfolio.
The Balance does not provide tax, investment, or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal.