Remember that earlier this month, it was reported that OAO Gazprom, Lukoil and Mobile Telesytems, stocks that combine for nearly 21.5% of RSX’s weight, trade at an average discount of 40% to their 10-year average P/E ratios. [Russia ETFs: Finally Cheap Enough?]
The Market Vectors Russia Small-Cap ETF (NYSEArca: RSXJ) holds some attractively-priced names among its 31 constituents. RSXJ is inexpensive compared to RSX. The small-cap ETF had a trailing 12-month price-to-book ratio of just 0.34 at the end of March, less than half RSX’s price-to-book ratio. [Big Potential With Small-Cap Russia ETF]
By at least one estimate, RSXJ trades at just 2.2 times weighted average cash flow. As the below chart from Research Affiliates shows, a fundamentally-weighted strategy proved durable during the second Chechen War and the Russo Georgian War.
Chart Courtesy: Research Affiliates