Tne new Russian exchange-traded fund (RSX) introduced by the Van Eck family of ETFs is decidedly an energy play. RSX tracks the DAXglobal Russia Index, which holds 30 companies based in Russia and attempts to represent the Russian economy broadly. RSX is very exposed to energy companies, accounting for over $150 billion of exports in 2006. Backtested the DAZglobal Index has yielded a 5-year annualized performance of about 40% .
This dependence on energy cuts both ways of course but keep in mind that politically Russia may present global ETF investors with more risk than other BRIC countries. Russia will also be watched closely as it elects new leadership in early 2008.
Jonathan Bernstein of ETFzone points out that only one company in the top eight holdings of RSX is not an energy company. This is Sberbank which is heavily involved in energy lending. A quick glance shows that almost 50% of the RSX basket is accounted for by the largest seven energy holdings. Still, RSX is far superior in terms of cost and flexibility to previous Russian funds on the market and has an annual fee of only 0.69%.
By Carl Delfeld of the Chartwell ETF Advisor
Comments