World’s Biggest Russia ETF Shuts to New Cash After Losses Deepen
(Bloomberg) -- The biggest exchange-traded fund investing in Russia will suspend share creations from Thursday, becoming the latest to effectively halt inflows as Wall Street reels from Moscow's intensifying assault on Ukraine.
VanEck is halting the creation of shares -- the process by which new cash enters an ETF -- for the VanEck Russia ETF (ticker RSX) until further notice, according to an SEC filing.
VanEck cited “significant declines” in the value and liquidity of Russian stocks for the move.
“Although shares of the Fund are expected to continue trading on Cboe BZX Exchange, Inc., there can be no assurance that an active market will be maintained for the Fund's shares,” the filing on Wednesday says.
On Tuesday, BlackRock Inc. halted the creation of new shares in its iShares MSCI Russia ETF (ticker ERUS) until further notice. DWS Investment and Franklin Templeton have taken similar actions.
RSX, with a $690 million market capitalization, has plummeted some 60% over the last week as sweeping sanctions hit the nation's assets. The ruble fell for a third day while the stock exchange in Moscow remains shut.
“The creation/redemption mechanism is what keeps the supply of ETF shares elastic and an ETF's share price in line with the value of its underlying holdings,” said Cinthia Murphy, director of research at ETF Think Tank. “A creation halt impacts that dynamic -- making an ETF behave more like a closed-end fund.”
©2022 Bloomberg L.P.
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