– Global mutual funds and exchange-traded funds with significant exposure to Russian equities and bonds have seen massive outflows and an erosion in their net assets over the past month, according to investment research firm Morningstar.
The data showed investors sold $1.41 billion worth of 71 Russia-exposed equity funds in February, due to increased concerns over Russia’s invasion of Ukraine and sanctions imposed by Western countries on Russia. The net selling in the last month was the biggest in at least a year.
Morningstar’s data is based on the top 100 global funds and ETFs based on their dollar exposure to Russian bonds and equities. The list contained 71 equity funds and 19 bond funds.
The Invesco Developing Markets A and Harding Loevner Institutional Emerging Markets I, which had about 8% exposure to Russian equities as of December, faced outflows worth $347.6 million and $221.6 million respectively.
Graphic: Biggest money outflows from funds exposed to Russian equities: https://fingfx.thomsonreuters.com/gfx/mkt/jnpwebrkapw/Biggest%20money%20outflows%20from%20funds%20exposed%20to%20Russian%20equities.jpg
As Russian stocks fell after the invasion, which Russia terms a ‘special military operation’, the country’s rouble-denominated MOEX stock index and the dollar-denominated RTS index lost 30% and 34.7% respectively last month.
Russian companies derive a significant portion of their revenue from the West, and investors fear that the sanctions could hurt their earnings for years.
Among bond funds, iShares JP Morgan USD Emerging Markets Bd ETF and PIMCO GIS Global Investment Grade Credit Institutional USD Inc faced outflows of about $1 billion each last month.
Graphic: Biggest money outflows from funds exposed to Russian bonds: https://fingfx.thomsonreuters.com/gfx/mkt/akpezxyjnvr/Biggest%20money%20outflows%20from%20funds%20exposed%20to%20Russian%20bonds.jpg
Also, the equity funds’ net assets dropped 4.3% to $2.03 trillion at the end of February, while bonds funds’ assets fell 3.4% to $456.5 billion, Morningstar data showed.
Graphic: Russia-exposed equity funds drop in net assets this year: https://fingfx.thomsonreuters.com/gfx/mkt/byprjenbepe/Funds%20exposed%20to%20Russian%20equities%20that%20see%20biggest%20drop%20in%20total%20assets.jpg
Graphic: Russia-exposed bond funds drop in net assets this year: https://fingfx.thomsonreuters.com/gfx/mkt/lbpgnzymmvq/Funds%20exposed%20to%20Russian%20bonds%20that%20post%20biggest%20drop%20in%20total%20assets.jpg
(Reporting by Gaurav Dogra and Patturaja Murugaboopathy; Editing by Vidya Ranganathan and Jonathan Oatis)
