HSBC Russia ETF closure leaves just one in Europe

The choice by HSBC Asset Administration to shut its Russia fairness change traded fund means there is just one such product open in Europe.

FinEx Capital Administration advised Ignites Europe it didn’t plan to shut its Russian RTS Fairness ETF, which has been suspended since March final 12 months following Russia’s invasion of Ukraine.

The fund was one among eight Russia fairness ETFs in Europe earlier than Russia’s invasion of Ukraine, which had mixed belongings below administration of €820mn on the finish of January 2022, in line with Morningstar information.

However the FinEx ETF, which had €72mn in belongings below administration in January final 12 months, is quickly to be the one a type of funds remaining, after HSBC AM introduced that it might shut its Russia Capped ETF on March 24.

HSBC AM mentioned in a shareholder discover: “The administrators have decided that it’s not sensible nor advisable for the fund to live on.”

An HSBC AM spokesperson added: “[The fund] has remained suspended since March final 12 months and we have now continually reviewed the state of affairs in one of the best pursuits of our shareholders.”

HSBC AM’s choice got here forward of the discontinuation of its fund’s underlying index on March 1 by MSCI, which is ready to desert all indices containing solely Russian securities on that date resulting from “prolonged lack of accessibility within the Russian fairness market”.

The discover cites MSCI’s choice as one of many causes for closing the fund, in addition to the continued invasion of Ukraine and the lack to eliminate or worth the fund’s investments.

It provides that the administrators have decided it’s now acceptable to redeem the entire fund’s shares, however that it’s “not anticipated” that there might be any distribution to shareholders on the closure date as a result of Russian securities presently can’t be bought.

“Within the occasion that it’s attainable to promote and realise any worth from the fund’s investments at a future date, the proceeds arising from the sale shall be paid to shareholders on a pro-rata foundation in accordance with every shareholder’s related holding within the fund,” HSBC AM mentioned.

DWS, BlackRock, Invesco and Amundi have all additionally introduced closures of MSCI Russia ETFs.

FinEx’s ETF was one among two European ETFs that adopted the RTS Index, which is operated by the Moscow Trade.

ITI Funds managed the opposite RTS Index ETF however introduced its closure in August final 12 months.

Pictet Asset Administration manages the biggest lively fund invested in Russian securities, which it suspended within the days following the invasion.

Pictet AM didn’t reply to a request for touch upon the agency’s plans for the fund.

Amin Rajan, chief government officer of Create-Analysis, an asset administration consultancy, mentioned he thought lively funds would liquidate too.

“The sanctions from the west have brought on lots of harm to Russia’s fundamentals,” he mentioned.

“Russia’s fundamentals are unlikely to get higher for a protracted whereas.”

*Ignites Europe is a information service printed by FT Specialist for professionals working within the asset administration business. Trials and subscriptions can be found at igniteseurope.com.

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