How to invest in Russia using ETFs
How do I invest in Russian stocks?
The easiest way to invest in the whole Russian stock market is to invest in a broad market index. This can be done at low cost by using ETFs.
On the Russian stock market you find 5 indices, which are tracked by ETFs.
Alternatively, you can consider indices on the BRIC countries and Eastern Europe. In the indices on Eastern Europe Russia is weighted strongly with a weight of over 50%. Whereas in the BRIC indices Russia is weighted with less than 25%.
Performance of Russian stocks (MSCI Russia)
Indices in comparison
The best indices for ETFs on Russia
For an investment in the Russian stock market, 5 indices tracked by 5 ETFs are available. Among the available indices there are number of capped indices. These indices limit the maximum weight of one constituent in the index in order to improve the diversification. The total expense ratio (TER) of ETFs on these indices is between 0.60% p.a. and 0.65% p.a..
| Index | Investment focus | Number of ETFs | Number of constituents | Short description |
|---|---|---|---|---|
Dow Jones Russia GDR |
Russia | 1 ETF | 12 (29/12/17) |
The Dow Jones Russia GDR (price) index tracks the largest and most liquid Russian stocks.
Index factsheet |
MSCI Russia |
Russia | 1 ETF | 22 (29/12/17) |
The MSCI Russia index tracks the Russian equity market.
Index factsheet |
MSCI Russia 25% Capped |
Russia | 1 ETF | 21 (31/10/16) |
The MSCI Russia 25% Capped index tracks the Russian equity market. Constituents whose weights are greater than 25% are capped daily to 22.5% and quarterly to 20%.
Index factsheet |
MSCI Russia Capped |
Russia | 1 ETF | 21 (31/10/16) |
The MSCI Russia Capped index tracks the Russian equity market. The largest constituent is capped at 30% while the weight of any other constituent is capped at 20% (reviewed quarterly or if 35% is reached).
Index factsheet |
Russian Depository |
Russia | 1 ETF | 15 (17/01/18) |
The Russian Depositary (price) Index (RDX) tracks the most liquid depositary receipts on Russian shares traded on the London Stock Exchange.
Index factsheet |
| ETF ISIN |
Fund size in m GBP |
TER in % |
Use of profits | Fund domicile | Replication method | |
|---|---|---|---|---|---|---|
| iShares MSCI Russia ADR/GDR UCITS ETF (Acc)IE00B5V87390 | 224 | 0.65% p.a. | Accumulating | Ireland | Full replication | |
| HSBC MSCI Russia Capped UCITS ETF USDIE00B5LJZQ16 | 137 | 0.60% p.a. | Distributing | Ireland | Full replication | |
| Xtrackers MSCI Russia Capped Index UCITS ETF 1CLU0322252502 | 111 | 0.65% p.a. | Accumulating | Luxembourg | Unfunded swap | |
| Lyxor Russia (Dow Jones Russia GDR) UCITS ETF D-GBPFR0011495944 | 15 | 0.65% p.a. | Distributing | France | Unfunded swap | |
| Source RDX UCITS ETF AIE00B5NDLN01 | 14 | 0.65% p.a. | Distributing | Ireland | Unfunded swap |
| Index | 1 month in % |
3 months in % |
6 months in % |
1 year in % |
3 years in % |
|
|---|---|---|---|---|---|---|
| Russian Depository | 2.25% | 5.96% | -1.27% | 20.78% | 68.71% | |
| MSCI Russia 25% Capped | 3.86% | 9.93% | 1.97% | 24.34% | 72.20% | |
| MSCI Russia Capped | 3.94% | 10.24% | 2.09% | 24.79% | 75.18% | |
| MSCI Russia | 4.08% | 8.34% | -0.44% | 25.74% | 75.04% | |
| Dow Jones Russia GDR | 4.92% | 10.20% | 2.89% | 27.96% | 76.20% |
| Index | 2018 in % |
2017 in % |
2016 in % |
2015 in % |
2014 in % |
|
|---|---|---|---|---|---|---|
| Russian Depository | 6.16% | -4.96% | 87.05% | 0.09% | -39.86% | |
| MSCI Russia | 7.63% | -2.09% | 86.37% | 0.85% | -40.78% | |
| MSCI Russia Capped | 9.98% | -4.16% | 48.24% | 35.32% | -43.24% | |
| MSCI Russia 25% Capped | 10.16% | -5.95% | 83.95% | 1.27% | -39.90% | |
| Dow Jones Russia GDR | 10.53% | -3.03% | 81.36% | 2.02% | -41.20% |
Source: justETF.com; As of 31/07/18; Calculations in GBP based on the largest ETF of the respective index.
The best Russia ETFs
by 1 year return
| 1 | Lyxor Russia (Dow Jones Russia GDR) UCITS ETF D-GBP | 27.96% |
| 2 | iShares MSCI Russia ADR/GDR UCITS ETF (Acc) | 25.74% |
| 3 | HSBC MSCI Russia Capped UCITS ETF USD | 24.79% |
The cheapest Russia ETFs
by total expense ratio (TER)
| 1 | HSBC MSCI Russia Capped UCITS ETF USD | 0.60% p.a. |
| 2 | iShares MSCI Russia ADR/GDR UCITS ETF (Acc) | 0.65% p.a. |
| 3 | Lyxor Russia (Dow Jones Russia GDR) UCITS ETF D-GBP | 0.65% p.a. |
Eastern Europe indices with a share of Russia
Besides Russia ETFs you may consider indices on Eastern Europe. In total, you can invest in 1 Eastern Europe index, which is tracked by 1 ETF. With over 50%, Russia is weighted strongly in Eastern Europe indices. The total expense ratio (TER) of ETFs on Eastern Europe is around 0.74% p.a..
| Index | Investment focus | Number of ETFs | Number of constituents | Short description |
|---|---|---|---|---|
| MSCI Emerging Markets Eastern Europe 10/40 | Eastern Europe
Russia: 64,41% (29/12/2017) |
1 ETF | 52 (29/12/17) |
The MSCI Emerging Markets Eastern Europe 10/40 index tracks stocks from emerging Eastern European countries.
The imbedded 10/40 rule limits the weight of a single company to 10% of the index. The sum of all companies with weights between 5% and 10% is limited to 40%.
Index factsheet |
| ETF ISIN |
Fund size in m GBP |
TER in % |
Use of profits | Fund domicile | Replication method | |
|---|---|---|---|---|---|---|
| iShares MSCI Eastern Europe Capped UCITS ETFIE00B0M63953 | 225 | 0.74% p.a. | Distributing | Ireland | Optimized sampling |
| Index | 1 month in % |
3 months in % |
6 months in % |
1 year in % |
3 years in % |
|
|---|---|---|---|---|---|---|
| MSCI Emerging Markets Eastern Europe 10/40 | 6.01% | 6.41% | -1.16% | 14.15% | 60.93% |
| Index | 2018 in % |
2017 in % |
2016 in % |
2015 in % |
2014 in % |
|
|---|---|---|---|---|---|---|
| MSCI Emerging Markets Eastern Europe 10/40 | 4.03% | 6.53% | 62.44% | -0.49% | -31.92% |
Source: justETF.com; As of 31/07/18; Calculations in GBP based on the largest ETF of the respective index.
Regional indices on Brazil, Russia, India and China (BRIC)
As second alternative to Eastern Europe you may consider indices on BRIC. In total, you can invest in 1 BRIC index, which is tracked by 1 ETF. However, in the BRIC indices Russia is only represented with less than 25%. The total expense ratio (TER) of ETFs on BRIC countries is around 0.74% p.a..
| Index | Investment focus | Number of ETFs | Number of constituents | Short description |
|---|---|---|---|---|
| FTSE BRIC 50 | Emerging Markets
Russia: 14.47% (29/12/2017) |
1 ETF | 50 |
The FTSE BRIC 50 index tracks the 50 largest stocks of the BRIC countries (Brazil, Russia, India, China).
Index factsheet |
| ETF ISIN |
Fund size in m GBP |
TER in % |
Use of profits | Fund domicile | Replication method | |
|---|---|---|---|---|---|---|
| iShares BRIC 50 UCITS ETFIE00B1W57M07 | 213 | 0.74% p.a. | Distributing | Ireland | Full replication |
| Index | 1 month in % |
3 months in % |
6 months in % |
1 year in % |
3 years in % |
|
|---|---|---|---|---|---|---|
| FTSE BRIC 50 | 1.43% | -1.87% | -7.74% | 11.81% | 59.56% |
| Index | 2018 in % |
2017 in % |
2016 in % |
2015 in % |
2014 in % |
|
|---|---|---|---|---|---|---|
| FTSE BRIC 50 | 0.96% | 23.98% | 39.62% | -7.59% | 1.78% |
Source: justETF.com; As of 31/07/18; Calculations in GBP based on the largest ETF of the respective index.