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U.S. investment manager Capital Group was among top exposed to Russia -data -Breaking


© Reuters. FILEPHOTO: This March 1st, 2022 illustration shows how the Gazprom logo is seen through broken glasses. REUTERS/Dado Ruvic/Illustration/File Photo

John McCrank and Davide Baruscia

NEW YORK – Capital Group Companies Inc is one of the most important investment management companies in the world. The company, which was best known for American Funds mutual fund investments, has billions of exposure to Russian firms that were either sanctioned, or curtailed by the United States due to Russia’s invasion Ukraine. This according to latest data available on the fund’s site.

The Los Angeles-based firm, which has over $2.4 trillion in assets under management, according to its website, had $4.55 billion in exposure across its American Funds franchise to Gazprom (MCX:), Sberbank, Alrosa and Sovkomflot as of Dec 31.

After the invasion of Ukraine, America, Britain, and other countries have imposed a variety of sanctions on Russia. They also placed travel bans, asset freezes and other restrictions against many Russians including President Vladimir Putin.

Russia considers its actions against Ukraine “special”

Sberbank’s connection to the U.S. financial system was severed, restricting the access of Russia’s largest financial institution to transactions made in the dollar, the White House said on Feb. 24. According to the White House press release, it placed correspondent and pay-through account sanctions against Sberbank. This includes 25 subsidiaries.

Sberbank along with Gazprom and Alrosa were prevented from issuing any new equity or debt on the U.S. markets. The U.S. is a major source of revenue and capital. It also limits the Kremlin’s ability raise money.

The securities held by funds of sanctioned and restricted Russian companies could be very hard to sell. Few buyers are willing to buy them. After a drop of 99.9% in London in 2022 Sberbank’s London depository receipts are now worth just a penny, indicating concerns about Russia’s largest bank.

Capital Group is a privately held company offering a variety of services to institutions, consultants, financial advisers, intermediaries, individuals and high-net worth investors. Representatives did not reply to our requests for comment.

According to the most recent data, Capital Group’s exposure to Russia was at least $8.19 Billion according to separate data from Morningstar. This data included the 100 most popular open-end and ETFs in the world.

American Funds was the global fund group with the highest exposure to Russia. It was listed in terms of estimated dollars exposure to Russian fixed income and equities. According to Morningstar analysis by Reuters, Vanguard and PIMCO are other significant holders.

Morningstar data disclosed American Funds’ positions at the close of 2013 and it’s not clear if Capital Group exited any position prior to Russia’s invasion.

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