For investors looking to diversify their portfolio in a unique way, the iShares MSCI Russia Capped ETF (NYSE Arca:ERUS) could be a good option to do just that.
As the name suggests, the fund holds companies that are based in Russia, with the energy sector making up a significant amount of its holdings. And at a price-to-earnings ratio of less than six, the ETF is a fairly cheap buy and has a very stable beta of around 0.6.
What’s interesting to note about this ETF is that since Donald Trump was elected on November 8, 2016, it has climbed more than 30%. That wouldn’t be as notable had it not been for how the fund had done prior to then: in the five years leading up to that date, the ETF had fallen by more than 26%.
That’s not to suggest that the increase was a direct result of the election, but it’s hard to ignore the change in trend.
Nonetheless, the stock has been doing well since then and year to date it is already up 25%. For investors looking to diversify outside of North America, it could be a good way to hedge against fears of a recession.
And with oil prices still fairly low, there could be a lot of opportunity for Russian energy stocks to rise in value if we see commodity prices rebound. The fund’s largest holding is Gazprom at over 16%, which is in the oil and gas sector and majority owned by the Russian government.
