Sunday , 23 April 2017

Home » RESOURCES » Deep Dive: Russia ETFs benefit the most amid Trump rally

Deep Dive: Russia ETFs benefit the most amid Trump rally

Getty Images

President-elect Donald Trump’s kind words for Russian President Vladimir Putin certainly haven’t hurt Russian stocks.

A review of emerging-market exchange traded funds reveals something interesting: Since Donald Trump’s surprise win Nov. 8, nearly all of them have fallen in price. Yet the best performers, by far, are ETFs that focus on Russian companies.

This outperformance was brought to our attention by this Twitter posting from Bespoke Investment Group:

The Russian stock market ETF remains the top performing ETF across asset classes over the last week: https://t.co/BC7ZVXqtkk $RSX

— Bespoke (@bespokeinvest) December 13, 2016

We took a broader look, beginning with a list of all emerging-market equity ETFs and mixed equity ETFs with a majority of investments in emerging markets, provided by Morningstar. Narrowing the list to 58 ETFs with market capitalizations of at least $100 million, there are only two ETFs that have risen since Nov. 8 (Election Day):

ETF Ticker Total return – Nov. 8 through Dec. 12 Total return – Jan. 1 through Dec. 12 Total return – 3 years Total return – 5 years
iShares MSCI Russia Capped ETF ERUS, -4.91% 19% 54% -10% -1%
VanEck Vectors Russia ETF RSX, -4.58% 17% 46% -15% -5%
Sources: Morningstar, FactSet

As you can see from the 2016-return column, those ETFs are on fire. And it isn’t only because of Trump’s kind words for President Vladimir Putin of Russia. OPEC’s deal to cut production, with the help of non-OPEC oil-producing nations, has sent the price of Brent oil for February delivery LCOG7, -1.15%  up 15% since Nov. 29, the day before OPEC’s announcement.

Will machines take over package deliveries?

(2:09)

Trump’s decision to nominate Exxon Mobil Corp. XOM, -2.16%  CEO Rex Tillerson for secretary of state may also bode well for Russia, because of Tillerson’s extensive dealings with Russian companies and Putin himself.

Don’t miss: Small-cap stock profile: 2U Inc. creates online programs for Yale, Georgetown

Taking another look at the table, you can see that the performance of the Russia-focused ETFs has been downright lousy over the past three and five years, but that reflects the cyclical nature of the oil market and its great importance to Russia. With oil on the upswing, there may be a lot more room for these ETFs to ride.

ETF holdings

Here are the top 10 holdings of the VanEck Vectors Russia ETF as of Dec. 12:

Company Ticker Industry
Gazprom OGZD, -1.66% Integrated Oil
Lukoil LKOH, +13.19% Integrated Oil
Sberbank of Russia SBER, -2.45%   Banks
Sberbank ADR SBRCY, -4.83% Banks
Gazprom ADR OGZPY, -4.07% Integrated Oil
Norilsk Nickel MNOD, -4.95% Metals/Materials
Novatek NVTK, -2.93% Integrated Oil
Tatneft GDR ATAD, -1.23% Oil and Gas Production
Magnit MGNT, -1.39%   Food Retail
Tansneft Oil and Gas Pipelines
Source: BlackRock, FactSet

And here are the top 10 holdings of BlackRock’s iShares MSCI Russia Capped ETF as of Dec. 12:

Company Ticker Industry
Gazprom OGZD, -1.66% Integrated Oil
Sberbank of Russia SBER, -2.45%   Banks
Lukoil LKOH, +13.19% Integrated Oil
Sberbank ADR SBRCY, -4.83% Banks
Norilsk Nickel MNOD, -4.95% Metals/Materials
Magnit MGNT, -1.39%   Food Retail
Novatek NVTK, -2.93% IntegratedOil
Tatneft GDR ATAD, -1.23% Oil and Gas Production
Rosenef Oil Co. ROSN, -4.17% Oil and Gas Pipelines
Surgutneftegas ADR SGGD, -1.01% Integrated Oil
Source: Van Eck Securities, FactSet
More from MarketWatch:

Let’s block ads! (Why?)

Receive News & Ratings Via Email – Enter your email address below to receive a concise daily summary of the latest news and analysts’ ratings with MarketBeat.com’s FREE daily email newsletter.







Deep Dive: Russia ETFs benefit the most amid Trump rally Reviewed by on . Getty Images President-elect Donald Trump’s kind words for Russian President Vladimir Putin certainly haven’t hurt Russian stocks. A review of emerging-market e Getty Images President-elect Donald Trump’s kind words for Russian President Vladimir Putin certainly haven’t hurt Russian stocks. A review of emerging-market e Rating:
scroll to top