Four-fifths of EM funds still trapped in Russian stocks - research

LONDON – Fewer than a fifth of actively managed rising market fairness funds have reduce their publicity to Russian shares to zero, knowledge from Copley Fund Analysis exhibits, with a lot of funds unable to promote out.

Russia has been severed from international monetary markets, and its shares and bonds ejected from indexes after Western nations imposed sweeping sanctions to punish Moscow for its Feb. 24 invasion of Ukraine.

Sanctions alongside Russian counter-measures, together with capital controls, have made the nation’s monetary markets broadly inaccessible for overseas buyers.

Newest fund submitting knowledge overlaying 253 funds with $450 billion property below administration confirmed 45 funds closed out of all Russia positions between end-2021 and end-April, the Copley analysis discovered.

“Many funds are holding positions that they'll’t get out of so will stay invested for some time,” stated Steven Holden at Copley.

Weightings have additionally fallen quickly, with Russia now making up just below 2% of common fund weights in comparison with 4.5% in January.

Russia’s present weighting was artificially excessive as a result of calculations nonetheless based mostly on final buying and selling costs from earlier than the warfare for some shares equivalent to Sberbank, Holden stated.

“Russia is falling down the ranks and can drift into insignificance over the course of the 12 months,” he added.

Russia weightings in energetic EM fairness funds https://fingfx.thomsonreuters.com/gfx/mkt/klvyklrklvg/Russiapercent20weightinspercent20end-April.PNG

Russian shares had been broadly held by rising market asset managers, particularly after the Moscow Alternate launched a dollar-denominated index in 1995.

Among the many funding automobiles which have completely exited Russia are funds by Morgan Stanley, Lazard Asset Administration, Templeton and Van Eck, the information confirmed.

Funds reducing Russia publicity https://fingfx.thomsonreuters.com/gfx/mkt/xmvjoywodpr/Fundspercent20cuttingpercent20Russiapercent20exposure.PNG