Industry Updates

FinEx turns Russia bond strategy into active emerging market ETF

FXRU will switch to an active strategy

Lauren Gibbons

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FinEx is set to change its Russia corporate bond ETF to an emerging market active ETF two years after trading of the product was suspended.

In a shareholder notice, the firm said it will overhaul the ETF’s strategy from tracking the Bloomberg Tradable Russian Corporate Bond index to employing active management to capture emerging market credit.

The ETF will be renamed from the FinEx Tradable Russian Corporate Bonds UCITS ETF (FXRU) to the FinEx Emerging Markets Corporate Bond Strategy UCITS ETF.

Martin Bednall, managing director at FinEx, said: “Following the instigation of EU restrictions, the fund's investment policy needed to change before the fund could be unsuspended.

“Due to the discontinued calculation of the Bloomberg EMRUS index, which was previously used for tracking, the fund no longer has a benchmark to track. Therefore, the fund is transitioning to active management with a focus on capital growth.”

The move comes after another Russian bond ETF, the ITI Funds Russia-Focused USD Eurobond UCITS ETF, was delisted from the London Stock Exchange (LSE) last November.

FXRU provided exposure to US dollar and euro-denominated ‘eurobonds’ issued by Russian corporate issuers.

Following sanctions imposed on Russia after the Ukraine invasion, the ETF tracked no index but continued to hold the underlying bonds.

FXRU joins a series of Russian equity ETFs that closed in the months following Russia’s invasion of Ukraine, including the $67.4m HSBC MSCI Russia Capped UCITS ETF (HRUD), and the Lyxor MSCI Russia UCITS ETF (RUS) which both track the MSCI Russia Capped index.

All Russia-focused ETFs were suspended in early March 2022, with the Moscow Stock Exchange closing a month earlier and foreign investors being banned from selling their investments.

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