ITI Funds’ Russia-focused UCITS ETFs list on Moscow Exchange
ITI Funds, a London-based emerging market ETF specialist, has had its two Russia focused ETFs admitted to trade on the Moscow Stock Exchange (MOEX).
ITI Funds ETFs were listed on London Stock Exchange on 22 February this year by emerging markets investment specialist, Da Vinci Capital Management. ITI Funds ETFs provide exposure to Russia-focused top quality equity and USD debt segments of the Russian financial market.
They are: ITI Funds RTS Equity UCITS ETF – which follows Russia’s oldest equity index – RTS; and ITI Funds Russia-focused USD Eurobond UCITS ETF – which follows ITIEURBD Index.
Denominated in US dollars, the ETFs started trading on the Moscow Exchange in RUB, in addition to the London Stock Exchange trading in USD. In total the funds currently have over USD10 million in assets. “ETFs are especially important given the increasing interest Russian citizens have in investing with exchange instruments," comments Anna Kuznetsova, managing director, securities market at MOEX.
The ITI Funds RTS Equity UCITS ETF physically holds 45 out of 46 equities (as it sold Rusal position last week to avoid holding sanctioned securities) replicating the free-float cap-weighted RTS Index, which is Russia’s oldest and most widely used equity index for equity securities traded on the Moscow Exchange, calculated in US dollars. The index is rebalanced quarterly with income to be distributed on an annual basis.
Elio Manca, managing director of ITI Funds, says: “The funds provide efficient entry, with diverse exposure to direct securities, into the Russian equity and bond markets at, what is currently, a low valuation. Both our Russia equity and bond ETFs are the only ETFs to provide 100 per cent replication of the underlying securities, outside of Moscow, and so have zero counterparty risk. Whilst we are conscious of the uncertainty surrounding Russia politically, the underlying economic fundamentals for Russian corporates, from an investment standpoint, remain compelling over the longer term.”
ITI Funds Russia-focused USD Eurobond UCITS ETF is based on ITIEURBD fixed income index designed in collaboration with the German index provider, Solactive AG. The index portfolio comprises USD Eurobonds of Russian issuers with a credit rating that is equivalent to Russia’s sovereign rating or above. Currently, the index comprises 23 bonds, providing investors with exposure to top-quality names on the market of Eurobonds of Russian issuers. It is calculated daily, assumes quarterly rebalancing and reinvestment of coupon income.
“Since a re-rating of Russia’s credit score by S&P in late February, we have seen Russian foreign debt feature across a range of global benchmarks marking Russia as one of the most appealing of investment-grade emerging markets. Indeed, this was proven when Russia issued USD4 billion in Eurobonds in mid-March, with orders for the issuance at almost double that at USD7.5 billion. Current yield to maturity is 5.2 per cent in USD with 4.5 years duration,” says Elio.