FinEx launches Russia’s first ETF
FinEx ETF Ltd, part of FinEx Group, has launched Russia’s first exchange-traded fund, the Russian Corporate Bonds UCITS ETF, on the Moscow Exchange. 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.
FinEx ETF expects continued strong growth in the global ETF market for the next few years and believes a growing proportion of this will be fuelled by investors in emerging markets, such as Russia.
Simon Luhr, managing partner and chief executive, FinEx Capital Management, says: “Today’s launch on the Moscow Exchange is the beginning of a new era for Russian investors, and a very exciting time for FinEx. Although globally ETFs have enjoyed huge growth in recent years, the phenomenon has a long way to go in many emerging markets globally.”
In recent research carried out by FinEx ETF among European institutional investors, 50 per cent expected improving Russian corporate governance and financial reforms to support the economy over the next five years.
A growing appetite for investing in Russian corporate debt among European institutional investors was highlighted in the research, with 35 per cent of respondents saying they expected institutional investors to increase their exposure to Russian corporate debt.
Alexander Afanasiev, chairman of the executive board and CEO, Moscow Exchange, says: “The entrance of the first ETF on to the Moscow Exchange signals an important step in the development of financial infrastructure in Russia. The launch of this type of global product contributes to the establishment of Moscow as an international financial centre.”
Evgeny Kovalishin, president and CEO of FinEx Plus, says: “ETFs are ideally suited to Russia, as their key attributes of transparency, efficiency and liquidity are of high importance to Russian investors, particularly transparency. We strongly believe that the Russian ETF market is set to soar.”
BNY Mellon, the largest global administrator of ETFs in terms of funds serviced, has been selected as custodian and administrator for the Fund.
The FinEx Tradable Russian Corporate Bonds UCITS ETF 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 is denominated in US dollars. As such, the Ruble-denominated share class launched on the Moscow Exchange is hedged against the dollar. 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 8.04 per cent over one year to 17 April 2013. It also returned a net 47.39 per cent from a calculation inception date of 1 June 2009 to 17 April 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 the USD share class is cross-listed on the London Stock Exchange.