January 03, 2023: -VanEck is liquidating its Russia-centric exchange-traded funds after the ongoing battle in Europe has effectively severed the Russian demand from Western investors.
Russia’s ETFs tumbled after the country’s army invaded Ukraine. Moscow’s stock market was closed temporarily, and ongoing sanctions indicated that major stocks such as Gazprom could not be traded in the West, creating liquidity concerns for the funds.
VanEck’s Russia ETFs, the VanEck Russia ETF (RSX) and VanEck Russia Small-Cap ETF (RSXJ), were effectively frozen following March 4.
“The Reserves’ inability to buy, sell and take or make delivery of Russian securities has made it not impossible to manage the Funds uniform with their investment objectives. The Funds will not engage in any business or investment activities except to wind up their affairs,” VanEck stated in a release Wednesday evening.
The firm has broken redemptions of the funds under an order from the Securities and Exchange Commission while liquidating the positions. VanEck said it decided to distribute any proceeds from the liquidation to investors on roughly January 12, 2023.
According to FactSet, the RSX fund had more than $1.3 billion in assets under administration at the beginning of 2022.
VanEck’s move tracks parallel announcements by Franklin Templeton last week and BlackRock in August about their Russia ETFs.