Investments  

Emerging Europe funds suspend dealings amid sanctions

Emerging Europe funds suspend dealings amid sanctions
  Independent Square (Maiden) in the centre of Kyiv, Ukraine

Swathes of emerging Europe funds are closing after the war in Ukraine led to a flurry of sanctions on Russia.

Blackrock has suspended trading in its Emerging Europe Fund, which has a 67 per cent exposure to Russia, as well as the creation of new shares in its iShares MSCI Russia ETF.

Existing shares in the Russia ETF will still be able to trade on the secondary market.

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Jupiter has halted trading in its Emerging European Opportunities Fund, and Barings has suspended its Eastern European Fund.

A spokesperson for Jupiter said the decision was based on the company's understanding of the geopolitical situation, and the sharp deterioration in its ability to transact, and to achieve fair valuation of the fund’s holdings, having closely monitored the market conditions throughout each day.

"We believe that this course of action is in the best interests of investors, whose investments we seek to protect in these difficult circumstances.”

A spokesperson for Barings said it will continue to "actively assess" the impact of the events in Russia and Ukraine as they unfold.

Pictet has also suspended trading in its Russian equities fund, which saw a -34.25 per cent return in February, according to FE Fundinfo.

UK funds with highest exposure to Russia 

Fund

Exposure

Pictet Russian Equities

100%

iShares MSCI Russia ETF (Blackrock)

98.93%

HSBC MSCI Russia Capped ETF

98%

Liontrust Russia

97.34%

HSBC Russia Equity

95.46%

JP Morgan Russia

92.8%

Invesco Emerging European

78%

Barings Eastern Europe Fund

70.2%

JP Morgan Emerging Europe Equity

68.8%

Blackrock GF Emerging Europe

66.64%

ASI Eastern European Equity

65.73%

Schroder ISF Emerging Europe

63.1%

Jupiter Emerging European Opportunities 

60.99%

Fiera Magna Eastern European 

57.6%

Source: FE Fundinfo

Invesco’s Emerging European fund has a 78 per cent exposure to Russia, however the fund announced to shareholders last November that the fund will be closed this month.

It saw a -46.32 per cent return in February, and has posted a -30.25 per cent return over the three years to the end of February, according to FE Fundinfo.

A spokesperson for the company, who said the decision was made prior to recent events in Ukraine and Russia, said it was decided the fund was no longer commercially viable.

The worst-performing funds in February were all funds with exposure to eastern Europe, with many of the funds now suspended for dealing.

Ben Yearsley, director at Fairview Investing, said financial markets change quickly.

"A few months ago, Covid was still dominating the newsflow and sentiment, whereas that has barely been mentioned in recent weeks.

"As happened with the fall out from tech, recent events show the need for having a broad mix of investments in your portfolio doing different things."

The Moscow Stock Exchange has been closed since Monday morning after it had lost 33 per cent of its value in a single day on February 22.

Russian banks have also been banned from Swift, the messaging network that underpins global payments, and the Russian central bank is now banned from accessing foreign reserves.

Ten worst performing funds in February

Funds

Return 

Liontrust Russia

-62.41%

Invesco Emerging European

-46.32%

Barings Eastern Europe

-45.46%

Jupiter European Emerging Opportunities

-38.73%

Pictet Russian Equities

-34.25%

Fiera Capital Europe Magna Eastern European

-33.65%

HSBC GIF Russian Equity

-33.46%

JPM Emerging Europe Equity

-32.57%

JPM Russia

-32.51%

Fidelity Emerging Europe Middle East & Africa

-31.52%

Source: FE Fundinfo

Earlier this week (Marc 1) JP Morgan halted dealing in its JPM Emerging Europe Equity Fund, Russia Equity fund and Europe Equity Fund with immediate effect.

Liontrust also suspended its Russia fund, which saw a -62.41 per cent return in February.