For what feels like all of this year, the Market Vectors Russia ETF (NYSEArca: RSX) has taken investors on a wild ride.
RSX’s penchant for turbulence is not going unnoticed with bearish traders. On Tuesday, a day after the Russian central bank stunned global financial markets by its benchmark interest rate to 17% from 10.5%, short interest in RSX as a percentage of the ETF’s shares outstanding jumped to 11%, the highest since March, reports Halia Pavliva for Bloomberg.
The rate hike was the second since lastThursday and in the span of less than a week Russian borrowing costs have more than doubled from 8%. [Interesting Day for Russia ETFs]
RSX was particularly volatile in the aftermath of the rate cut, trading in a 20% range on Tuesday. The largest Russia ETF surged 10.1% Wednesday on volume that was more than quadruple the daily average, cutting its one month loss to 23.1%.
That is not deterring some traders from taking a bearish view of RSX. Traders pulled $49.4 million from the ETF on Monday, the biggest one-day outflow from the fund since September 2013, according to Bloomberg.
However, if short sellers keep piling into RSX, the ETF’s shares outstanding total will increase, effectively boosting its assets under management tally. Despite tumbling more than 45% this year, RSX has hauled in $1.22 billion in new assets. That is the most among the four major single-country ETFs tracking BRIC nations and nearly double the year-to-date inflows to the iShares MSCI Brazil Capped ETF (NYSEArca: EWZ).
While some traders are opting to short RSX, others are taking a bolder approach by piling into the triple-leveraged Direxion Daily Russia Bear 3x Shares (NYSEArca: RUSS).
As of Tuesday, RUSS had seen its shares outstanding tally rise to 1.25 million from 1.05 million this month, according to Direxion data. Although RUSS has been cut in half since its Tuesday intraday high, the ETF has still nearly tripled this year, making it one of 2014’s top-performing leveraged ETFs. [Best Leveraged ETFs of 2014]
Market Vectors Russia ETF
