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Global funds with exposure to Russia faced big outflows in Feb -Breaking

by Mike Robinson

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© Reuters. This illustration, taken on March 1, 2022, shows a Russian Ruble banknote in front of an ascending stock graph. REUTERS/Dado Ruvic/Illustration

(Reuters) – Over the past month, global mutual funds and exchange traded funds heavily exposed to Russian equities have witnessed massive outflows as well as an erosion of their net assets according to Morningstar Investment Research.

Data showed that investors purchased $1.41 billion of Russia-exposed funds in February. This was due to growing concerns regarding Russia’s invasion Ukraine and Western sanctions on Russia. This was the largest net sale in at least one year.

Morningstar uses data from the Top 100 Global Funds and ETFs that are exposed to Russian bonds and stocks. There were 71 equity and 19 bond funds on the list.

Invesco Developing Markets I and Harding Loevner Institutional Emerging Markets I were approximately 8% exposed to Russian equity as December ended. Outflows of $347.6 millions and $221.6million, respectively, occurred.

Graphic: Biggest money outflows from funds exposed to Russian equities: https://fingfx.thomsonreuters.com/gfx/mkt/jnpwebrkapw/Biggest%20money%20outflows%20from%20funds%20exposed%20to%20Russian%20equities.jpg

Russian stocks plunged following the incursion, which Russia calls a “special military operation”. The MOEX stock index in rouble and RTS lost 34.7% and 30% respectively, last month.

Russian businesses derive significant amounts of their revenues from the West. Investors fear that sanctions will have a long-lasting impact on their profits.

iShares JP Morgan USD Emerging Markets Bd ETF faced about $1 billion in outflows while PIMCO GIS Global Investment Grade Credit Institutional USD Inc was subject to around $1 million each month.

Graphic: Biggest money outflows from funds exposed to Russian bonds: https://fingfx.thomsonreuters.com/gfx/mkt/akpezxyjnvr/Biggest%20money%20outflows%20from%20funds%20exposed%20to%20Russian%20bonds.jpg

Morningstar data revealed that equity funds saw their net assets drop by 4.3% at $2.03 trillion, and bonds assets declined 3.4% at $456.5 billion.

Graphic: Russia-exposed equity funds drop in net assets this year: https://fingfx.thomsonreuters.com/gfx/mkt/byprjenbepe/Funds%20exposed%20to%20Russian%20equities%20that%20see%20biggest%20drop%20in%20total%20assets.jpg

Graphic: Russia-exposed bond funds drop in net assets this year: https://fingfx.thomsonreuters.com/gfx/mkt/lbpgnzymmvq/Funds%20exposed%20to%20Russian%20bonds%20that%20post%20biggest%20drop%20in%20total%20assets.jpg

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