On Monday we noted a pickup in options activity in RSX (Market Vectors Russia), which provides an opportunity for us to closely examine exchange traded funds with exposure to the country.
RSX is the giant in the space, having debuted back in April of 2007 and having amassed approximately $1.6 billion in assets while averaging about 4.8 million shares traded daily.
However, over time, a number of other approaches that also offer exposure to the Russian equity market have appeared in ETF form, starting with ERUS (iShares MSCI Russia Capped Index). Unlike RSX which tracks the DAXGlobal Russia Index, ERUS is based on the MSCI Russia Capped Index. RBL (SPDR S&P Russia) is yet another alternative, and it tracks the S&P Russia Capped BMI Index.
RSX, ERUS, and RBL are all large cap oriented, and that said, RSXJ (Market Vectors Russia Small Cap) offers exposure to the small cap segment of the Russian equity market.
Short term traders looking to leverage directional bets to the country specific ETF and/or hedge portfolios aggressively, will likely find appeal in RUSL (Direxion Daily Russia Bull 3x) and RUSS (Direxion Daily Russia Bear 3x) which track the DAXGlobal Russia Index from a 3 times daily leveraged long and short standpoint, respectively.
Russia, which is the “R” in the BRIC acronym, is often known as having higher risk and volatility characteristics than some of the other Emerging BRIC economies. Thus, looking at trailing one year returns, Russia as measured by RSX has lost 25.30% over this period versus the MSCI Emerging Markets Index down 10.10%.
Year to date, RSX is up 10.01% versus the MSCI Emerging Markets Index up 10.11%, so roughly in line with each other. Since inception in 2007, Russia has significantly lagged the MSCI EM index, losing 25.39% versus the index up slightly (+0.59%). For an economy that tends to be heavy Energy (RSX has a 40.28% weighting to energy names for example) and Basic Materials (21.28%) weighting, the fortunes of energy related commodities may heavily weigh on the potential performance of Russian equities, and is something to monitor closely when investing in any of the Russian equity related funds.
Market Vectors Russia
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