The Market Vectors Russia [product website web link] (RSX) has been trading in the red lately as illustrated in the three-month chart due to a downtrend in energy commodity prices – as the ETF has a 38.9% concentration in oil and gas companies – and the invasion of Georgia. The Russia ETF is dominated (95%) by large caps, defined in this fund as companies over $6 billion market caps, of which over two-thirds are commodity-related (energy, metals, and agriculture).
The fund is also facing headwinds from a 28.4% weighting in iron/steel and agricultural companies because of the overall decline in commodities .
The accompanying chart reveals a decline of about 30% over the last three months for the Russia ETF as compared to declines of about 10% and 20% for the S&P 500 Index and Energy Sector SPDR, respectively. Aside from the recent decline in commodities, investors appear to be bailing on concerns that Russia is returning to old ways of bullying its much smaller neighbors through military actions. Given the political uncertainties and decline in commodities, I would stay away from the Russia ETF until these two key factors change in favor of the fund.
The fund is also facing headwinds from a 28.4% weighting in iron/steel and agricultural companies because of the overall decline in commodities .
The accompanying chart reveals a decline of about 30% over the last three months for the Russia ETF as compared to declines of about 10% and 20% for the S&P 500 Index and Energy Sector SPDR, respectively. Aside from the recent decline in commodities, investors appear to be bailing on concerns that Russia is returning to old ways of bullying its much smaller neighbors through military actions. Given the political uncertainties and decline in commodities, I would stay away from the Russia ETF until these two key factors change in favor of the fund.
$38.94 (08/19/08)
