ETF investors pile into Russian equities and defence stocks

ETF investors pile into Russian equities and defence stocks

Western exchange traded fund investors have ignored rising tensions in Ukraine and bought into Russian equity funds in recent days, but have also loaded up on guns, bombs and bullets.

They have increased their exposure to gold — long considered a safe haven in times of crisis — and energy funds as oil prices hit $96.50 a barrel, but have cut their bets on the US and European stock markets and eastern Europe.

ETFs focused on Russian equities took in a net $89.5mn in the week to Monday’s US market close, according to data from TrackInsight. This equates to a third of the net flows so far this year and is equivalent to 3.1 per cent of the $2.9bn of assets held by the 15 ETFs, listed in the US, Europe and East Asia.

The VanEck Vectors Russia ETF (RSX) had net inflows of $61.3mn in the week to Monday, while BlackRock’s iShares MSCI Russia ETF (ERUS) attracted $20.6mn, according to TrackInsight.

Similar data from FactSet, covering 38 ETFs and mutual funds that have at least 50 per cent exposure to Russia, with combined assets of $8.7bn, showed net inflows of $69.7mn in the week to last Thursday.

The buying spree comes despite a sharp