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FinEx enters European ETF market with launch of Russian corporate bond fund

FinEx ETF has entered the European exchange-traded fund market with the launch of the FinEx Tradable Russian Corporate Bonds Ucits ETF on the London Stock Exchange.

FinEx Capital plans to cross-list the fund as soon as possible on other major stock exchanges in Europe.

It will track the Barclays EM Tradable Russian Corporate Bond (EMRUS) Index, which focuses on shorter maturity liquid Eurobonds issued by Russian non-sovereign issuers.

As well as listing ETFs on Western stock exchanges, the company’s strategy is to be a market leader in emerging markets, where in many cases ETFs are not listed. For example, FinEx plans to launch this ETF on the Moscow Exchange MICEX-RTS shortly, which it expects to be the first ETF to list in Russia.

FinEx ETF expects continued strong growth in the global ETF market for the next few years and it believes increasingly a growing proportion of this will be fuelled by investors in Emerging Markets.

New research from FinEx ETF reveals that 44 per cent of European institutional investors expect to increase their investment in ETFs over the next 12 months. The corresponding figure for three years is 46 per cent.

FinEx ETF’s promoter is FinEx Capital Management, of which the managing partner and chief executive officer is Simon Luhr. He has 30 years’ experience in investment management and banking, and established and managed the equities finance, delta one and prime brokerage businesses at both Morgan Stanley and Nomura.  He later co-founded Marble Bar Asset Management, SW1 Capital and FinEx Capital Management.

Luhr says: “This is a very exciting time to launch a new ETF proposition. We believe that ESMA has addressed many of the criticisms aimed at ETFs, for example in terms of transparency, and our Ucits offering will aim to comply with all of the recent recommendations made by it.

“Although the global ETF market has enjoyed phenomenal growth in recent years it has yet to take off in many Emerging Markets. They are a new frontier to which we can take our very strong proposition.

“In addition to this, given the competitiveness of our products, we are also looking to gain a strong foothold in Western and more established markets.”

Deborah Fuhr, partner at independent research and consultancy firm ETFGI, says: “This is far from another ‘me too’ entry into what some commentators might say is a highly competitive ETF market. FinEx has a fresh take on the ETF market with its strategy to act as a bridge, bringing Western style products to Emerging Markets while offering Western investors access to emerging economies. It is an area of the market that offers great potential.”

The fund will track the Barclays EM Tradable Russian Corporate Bond (EMRUS) Index, which tracks the performance of a basket of shorter maturity liquid Eurobonds from Russian non-sovereign issuers. The index was launched in December 2012 but back-testing of its constituent securities on an unhedged US dollar basis shows that it delivered a total net return of 8.17 per cent over one year to 15 February 2013. It also returned a net 46.29 per cent from a calculation inception date of 1st June 2009 to 15 February 2013.

Securities issued by domestic Russian quasi-sovereign and corporates are eligible for the index, with a maximum of three bonds per issuer. Issuer caps and floors are applied to enhance diversification. Duration of the bonds ranges from 18 months to five years.

The ETF has been listed on the Irish Stock Exchange and is cross-listed on the London Stock Exchange.

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