The VanEck Vectors Russia ETF (NYSEArca: RSX) is up just slightly over the past month, but the largest Russia exchange traded fund is higher by nearly 25% year-to-date, making it one of the best-performing, non-leveraged, single-country emerging markets ETFs.
Analysts and market observers are increasingly bullish on Russia’s prospects as oil prices rebound and the country inches toward an economic recovery.
With the oil factor in mind and the energy sectors overweight position in ETFs like RSX and the iShares MSCI Russia Capped Index Fund (NYSEArca: ERUS), it might be logical to think that the more oil prices rally, the more investors would favor Russian stocks. However, Russia is one of the more volatile emerging markets so some investors might need some extra prodding to get involved with ETFs such as ERUS and RSX.
“J.P. Morgan upgraded Russia to overweight from neutral in its bullish emerging market outlook report released Tuesday, writing that ‘a potentially higher oil price range is the catalyst for upgrading Russia,’” reports Dimitra DeFotis for Barron’s.
Onlookers remain cautious over the market outlook. While President Vladimir Putin and other Russian politicians argue that the worst is over, the economy is expected to remain in a recession for the year. Russia’s GDP is expected to contract again this year, extending what is becoming a lengthy recession.