Russia ETF Sees Heavy Inflows as Oil Prices Rebound

ETF Trends

Market Vectors Russia (RSX) is one of the best-selling ETFs the past week with investors adding more than $300 million to the fund as crude oil prices recover to around $95 a barrel.

The Russia ETF has been volatile in recent weeks after bouncing from its mid-April low.

“Investors are disappointed in the Russian market,” said Alexei Yazikov, head of research at Aton Capital LLC, in a Bloomberg report. “The market has a high dependency on oil prices.”

RSX is down about 9% year to date. The ETF has trended lower since early 2011 and remains well below its pre-crisis high.

The market’s poor performance has weighed on BRIC ETFs that invest in Brazil, Russia, India and China. [Russia ETFs Lag Behind Other BRIC Economies]

Yet some investors are tapping RSX for a recovery in Russian stocks, notes Chris Hempstead, director of ETF execution services at WallachBeth Capital. RSX has gathered net inflows of $327 million since May 9, according to IndexUniverse data.

The ETF is not for the faint of heart. For example, RSX fell 73.6% in 2008, then rallied 139.2% in 2009.

“The Russian stock market is one of the most volatile in the world … As such, we think RSX is suitable only as a satellite holding for the most risk-tolerant investors,” says Morningstar analyst Patricia Oey in a profile of the ETF.

“The extreme volatility of Russian stocks can be partially explained by the fact that the Russian economy is heavily dependent on oil and gas exports and as such is sensitive to fluctuating energy prices,” she added.

At the end of April, RSX had 42.9% in the energy sector and 17.5% in the materials sector.

Market Vectors Russia

View photo

.

russia-etf-rsx

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

Rates

View Comments (0)