Russia was one of the best-performing emerging markets last year, helping boost exchange traded funds such as the VanEck Vectors Russia ETF (NYSEArca: RSX) along the way, but some air has come out of the Russia trade to start 2017.
Year-to-date, RSX, the largest Russia ETF trading in the U.S., is down 3% and over the past month, RSX is lower by 5%.
Some market observers believe RSX and Russian equities have the wind at their backs in 2017 and not all of that has to do with the newly inaugurated U.S. president. Oil prices have rallied as growing economies devour raw materials to fuel their growth and recent plans to cut production from the oil cartel, the Organization of Petroleum Exporting Countries, along with other non-OPEC members.
Still, some familiar concerns, namely oil and politics, are issues investors must consider before jumping into Russian equities and ETFs like RSX.
“The Moscow composite index is down nearly 8 percent year to date, underperforming the U.S. by nearly 15 percent as optimism around the possibility of the removal of trade sanctions against Russia fades. And crude oil, which weighs heavily on the Russian economy, has traded in a narrow range so far this year, offering no help to Russian stocks,” reports CNBC.