• VanEck has suspended two Russia ETFs due to a lack of Western investment interest.
• The decision follows the Russian-Ukraine strife and ongoing Western sanctions against Russia.
• VanEck said 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.
Investment firm VanEck recently announced that it is suspending two Russia exchange-traded funds (ETFs) due to a lack of Western investment interest. The decision follows the Russian-Ukraine strife and ongoing Western sanctions against Russia, which are proving to be a major deterrent to profitability.
VanEck is a New York-based asset manager, and the decision to wind down its Russia ETFs was explained in a press release Wednesday. The statement read: “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 that would be prohibited by law or sanctions of the United States.”
Since Russia invaded neighboring Ukraine, the country’s stock market has taken a hit, with Moscow’s stock market closing temporarily. The ongoing Western sanctions against Russia essentially prohibit its major stocks, including Gazprom, from trading in the West. This, combined with the lack of Western investment interest, has caused liquidity issues for the funds.
Due to the prolonged inactivity, VanEck is liquidating its Russia ETFs. The company is also warning investors that, during the liquidation process, the funds may be unable to pay out the full amount of their net assets to shareholders prior to their termination.
VanEck’s decision to suspend the two Russia ETFs is likely to have a ripple effect across the entire sector, as ETFs were some of the most popular ways for investors to get exposure to the Russian market. The situation could also have major implications for the Russian economy, as the lack of Western investment could lead to a downturn in the country’s stock market.
For investors, the news is a reminder of the importance of diversifying their portfolios and remaining vigilant about market developments. With geopolitical tensions continuing to simmer, investors should keep a close eye on the situation and be prepared to adjust their investments accordingly.