Investors seem to be ignoring the escalating crisis in Ukraine, piling into exchange traded funds (ETFs) that focus on Russian equities and defence stocks.
ETFs focused on Russian equities took in a net $89.5 million U.S. in the last week, according to data from TrackInsight.
The VanEck Vectors Russia ETF (RSX) had net inflows of $61.3 million U.S. in the past week, while BlackRock’s iShares MSCI Russia ETF (ERUS) attracted $20.6 million U.S.
Data from FactSet, covering 38 ETFs and mutual funds that have at least 50% exposure to Russia, with combined assets of $8.7 billion U.S., showed net inflows of $69.7 million U.S. in the last week.
The buying spree comes despite a sharp sell-off for Russian equities, with the Moex index down almost 20% year-to-date. The median Russian ETF has suffered a loss of 12% so far this year, and 9.4% over the past week.
The VanEck Vectors Russia ETF, at $1.2 billion U.S. of assets under management, has a 41% exposure to the energy sector and is therefore potentially well-positioned to benefit from any rise in oil and gas prices.
Energy ETFs have also seen renewed interest, with net inflows of $619 million U.S. in the last week, according to TrackInsight, with about half the money being funneled into State Street’s Energy Select Sector SPDR Fund (XLE).
And defence sector ETFs have taken in $126 million U.S. in recent days, almost doubling their inflows so far this year compared to the first few months of 2020.
In contrast, broad S&P 500 ETFs saw $1.6 billion U.S. of outflows in the past week, reversing the buying witnessed earlier this year, while ETFs tracking the Euro Stoxx 50 index saw outflows of $147 million U.S.
