From Russia With Love

You probably know that Van Eck has finally listed its long awaited Russia ETF (RSX). You can click here for more info from Van Eck.

The fund is very heavy in energy at 40%. It is very heavy in several energy stocks you have heard of like Gazprom, Lukoil (client and personal holding), Rosneft and a few others.

In a few days or so I suspect the usual suspects will tell you to run from the room with your hands above your head and that you should scream while doing so.

That of course would miss the point. RSX offers exposure to a country with a low economic correlation to the US and a low stock market correlation. Russia has a much higher growth rate, surpluses of all sorts created by energy and a very strong currency.

The biggest wildcard is of course the political whims of Vladimir Putin. I think another Yukos is unlikely (not saying impossible) as it could cause a dramatic panic out of the country. The business from a year and half ago where the gas to the Ukraine was turned off shows that there could be problems in the future.

8 Comments

  1. Speaking of Putin, do you think anyone will be coming out with a Polonium-210 ETF?

    Reply
  2. Does that pertain to Luis Polonia? Was .210 his batting average?

    Reply
  3. IIRC Po is approx 5 million times more toxic than hydrogen cyanide per unit mass so if shares in the outfit that makes the antidote are available I think I could develop a pretty good pair-trade.

    If Russia got along better with its neighbors I’d be more heavily invested in the region but as things stand currently I regard it as almost exclusively a commodity play and, frankly, there are better commodity plays available. JMO

    Reply
  4. dkguBased upon Russian military and diplomatic actions,US Armed Forces liasons have begun to treat Russia more as an enemy than a friend. My view is that Russia will utilize western money and technology as long it suits their purpose, and then return to State control. We have been down this road elsewhere before but our good intentions (and greed) unfortunately target us as a willing patsies for confiscation of capital and innovation.

    Reply
  5. We’re the one ditching ABM treaties and ringing Russia with allies in East Europe and the Stans. Maybe they’re a little paranoid but it’s understandable how russian history might lead one to that.

    Reply
  6. Blame the United States. Brilliant.

    Reply
  7. Yeah, you got me – I Hate America(tm).

    Forgot to mention, we’re also sitting on a good chunk of the oil in the mideast. Purely for humanitarian reasons of course.

    Reply
  8. With the holdings being tied so heavily to oil, I would imagine, then, that this ETF would be tied heavily to commodity prices (oil and nat gas).

    Reply

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From Russia With Love

You probably know that Van Eck has finally listed its long awaited Russia ETF (RSX). You can click here for more info from Van Eck.

The fund is very heavy in energy at 40%. It is very heavy in several energy stocks you have heard of like Gazprom, Lukoil (client and personal holding), Rosneft and a few others.

In a few days or so I suspect the usual suspects will tell you to run from the room with your hands above your head and that you should scream while doing so.

That of course would miss the point. RSX offers exposure to a country with a low economic correlation to the US and a low stock market correlation. Russia has a much higher growth rate, surpluses of all sorts created by energy and a very strong currency.

The biggest wildcard is of course the political whims of Vladimir Putin. I think another Yukos is unlikely (not saying impossible) as it could cause a dramatic panic out of the country. The business from a year and half ago where the gas to the Ukraine was turned off shows that there could be problems in the future.

Submit a Comment

Your email address will not be published.

WP-SpamFree by Pole Position Marketing