Exchange-traded fund (ETF) and mutual fund manager VanEck recently announced plans to liquidate its Russia-centric ETFs in response to Russia's war with Ukraine effectively severing the Russian market from Western investors.
Russia-focused ETFs have fallen heavily since the country's invasion of Ukraine. That attack impacted VanEck's Russia ETFs -- the VanEck Russia ETF
"The Funds' inability to buy, sell, and take or make delivery of Russian securities has made it impossible to manage the Funds consistent with their investment objectives. The Funds will not engage in any business or investment activities except for the purposes of winding up their affairs," VanEck said in a statement.
According to VanEck, the state of the world in terms of political affairs have made a major impact on Russia's equities. Since VanEck is based in the United States (New York), the company at times will enforce sanctions when it comes to Russian transactions that are made.
For now, VanEck has paused any type of fund redemption, as per a request from the Securities and Exchange Commission. January 12, 2023 is when VanEck anticipates the administration of any type of liquidation to investors.
"The effect of geopolitical affairs and sanctions imposed by the United States and other countries on transactions in Russian equities, and on related clearance and payment systems, have rendered a substantial number of the funds' positions illiquid, including many depositary receipts," VanEck said in a press release.
VanEck also said that there is a real inability to sell, purchase, or distribute Russian securities, which undermines the company's ultimate investment goals. In the long run, VanEck is looking for an improvement in the Russian markets, or else liquidation will take a much longer time than usual.
Because of the political situation in Russia, particularly the war with Ukraine, Russian stocks have severely plummeted in addition to other financial difficulties. Asset managers have attempted to stay away from investments with Russia for these reasons, according to Bloomberg.
- https://www.vaneck.com/us/en/press-releases/vaneck-provides-update-on-future-plans-for-its-russia-focused-etfs-rsx-and-rsxj.pdf/
- https://www.cnbc.com/2022/12/29/vaneck-is-winding-down-its-russia-etfs-after-invasion-froze-us-investing-in-moscow.html
- https://www.bloomberg.com/news/articles/2022-12-29/vaneck-liquidates-two-russia-etfs-rsx-rsxj-nearly-a-year-into-ukraine-war
