Bulletpoints:
-VanEck has suspended two of its Russia ETFs due to prolonged inactivity following Russia’s invasion of Ukraine.
-Western sanctions against Russia have caused a lack of US investment, making it impossible to manage the funds according to their investment objectives.
-VanEck has announced that it will liquidate the funds as a result of the inactivity.
New York-based asset manager VanEck has recently announced that it will be suspending two of its Russia exchange-traded funds (ETFs) due to prolonged inactivity following Russia’s invasion of Ukraine.
The Russian market has taken a hit since the country invaded neighboring Ukraine, with Moscow’s stock market closing temporarily. Western sanctions against Russia have also effectively prohibited its major stocks, including Gazprom, from trading in the West, thereby causing liquidity issues for the funds.
Since the Russian-Ukraine strife began, US investment in Russia has significantly decreased, leading to a lack of interest and activity. This has made it impossible for VanEck to manage the funds according to their investment objectives. As a result, VanEck has announced that it will liquidate the funds.
In a press release, VanEck stated, “The Funds‘ inability to buy, sell, and take or make delivery of Russian securities has made it impossible to manage the Funds consistent with their investment objectives. The Funds will not engage in any business or investment activities until further notice.”
The announcement of the suspension has caused quite a stir in the investment world. It remains to be seen how the funds‘ suspension will affect the Russian economy. Nevertheless, the move by VanEck serves as a reminder to investors that the ongoing geopolitical tensions can have a major impact on investments.