Compared to other BRIC funds, the Market Vectors Russia ETF (NYSEArca: RSX), the largest Russia exchange traded fund trading in the U.S., has had a banner year, surging 15.4%. As emerging markets equities and ETFs have sharply rebounded in recent weeks, RSX has displayed its leadership, gaining more than 10% over the past month.

The combination of a weakening energy outlook and the depreciating currencies are dragging on the ETFs that cover the major exporting countries. For instance, the energy sector makes up more than 40% of the portfolio in RSX. Looking ahead observers remain cautious over market outlook, and While President Vladimir Putin and other Russian politicians argue that the worst is over, the economy is expected to remain in recession for the year. Investors are also expressing concern regarding one of Russia’s worst recessions in the post-Soviet era. [Issues for Russia ETFs]

In June, the Bank of Russia cut its one-week auction to 11.5% from 12.5%. Just six months ago, Russia’s central bank boosted its benchmark interest rate to 17% from 10.5%. However, rising inflation there is seen as a hurdle to additional easing. Last week, the Bank of Russia estimated June inflation to be 15.6%. [Russia Economy, ETFs on the Mend]

Investors could also be lured back to RSX and Russian stocks due to some of the emerging world’s cheapest valuations.

However, for now, many investors are cutting their losses as outflows from emerging markets ETFs continue at a blistering pace. Developing world equities have to contend with plunging currencies, slack commodities demand and stumbling stocks in China, the largest emerging market. [Emerging Markets ETFs Keep Bleeding Assets]

Still, Russia is mired in its worst post-Soviet era recession.

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