Russia-focused funds, ETFs see big declines this week as Ukraine crisis rages

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Illustration shows Russian Rouble banknote is placed on U.S. Dollar banknotes

– Overseas mutual funds and ETFs that invest in Russian stocks and bonds have suffered massive losses this week, after Moscow launched an all-out invasion of Ukraine, drawing economic sanctions and condemnation from the West.

The VanEck Russia ETF, which has about 82% exposure to Russian stocks, tumbled 33%, while iShares MSCI Russia ETF, which has an exposure of about 89%, was down 35.3%.

Performance of Russia-focused equity funds this year –

The rouble-denominated MOEX stock index and the dollar-denominated RTS index have both lost over 31% each this week.

The rout in the stock markets of Russia and Ukraine also makes their equities the worst performers this week on a percentage basis.

Price performance of major stocks markets this year –

Russian companies derive a significant portion of their revenue from the West, and investors fear that the sanctions could hurt their earnings for years.

Overseas bond funds, which invest in Russian debt, have also faced big declines this week.

The DWS Russia Bond Fund, which invests in bonds issued by the Russian government as well as in supra-nationals denominated in rouble, has declined over 20% this week.

Performance Russia-focused debt funds this year –

Russia’s 10-year government bond yield surged to 13.25% as of Friday, compared with 9.75% at the end of last week.

(Reporting By Patturaja Murugaboopathy and Selena Li in Hong Kong; Additional Reporting by Gaurav Dogra in Bengaluru; Editing by Anil D’Silva)