Today the Moscow Exchange began trading the units of the first Russian exchange-traded fund (ETF), created by Sberbank Asset Management. The fund tracks the MOEX Russia Total Return Index. Sberbank CIB , the corporate and investment banking business of Sberbank, is the market maker and authorised manager of the fund.
Exchange-traded funds, or exchange-traded unit investment funds as they are known in Russia, are funds with investment units that are bought and sold on a stock exchange. They are formed from securities in strict accordance with the stock exchange index.
MOEX’s website provides detailed real-time information about the portfolio of securities of the index, which serves as the new fund’s underlying asset. Sberbank CIB, one of Russia’s biggest brokers, guarantees the liquidity of the fund – in other words, the ability to buy and sell the fund’s units throughout the trading day. It also provides two-way quotes of the ETF on the exchange and their sufficient volume, and acts as an authorised manager. To trade the ETF, including via the Sberbank Investor application, a client only needs to possess a brokerage account. The composition of the fund’s portfolio is sent in real time to the exchange, which calculates and publishes the intraday NAV every 15 seconds. This allows traders to track the ETF’s alignment with the index. Total expenses for investors do not exceed 1.1% per year .
Andrey Shemetov, Vice President and Head of the Global Markets Department of Sberbank CIB:
“ETFs are one of the main trends in the world of investing, and we are delighted to help develop this new class of instrument in Russia. I am confident that the fund has big potential to develop and will give the Russian stock market new momentum by attracting new private investors.”
Yevgeny Zaitsev, CEO of Sberbank Asset Management:
“The market got the chance to create ETFs that comply with Russian law after the Bank of Russia prepared the necessary regulations. I am very pleased that we were the first to do this. We consider that our ETF will be most popular among retail investors who actively trade via brokerage accounts. In the future we plan to launch ETFs for institutional investors too, as they actively invest in such instruments on Western markets. We plan to significantly broaden our product line by releasing at least three new ETFs by the end of the year.”
Alexander Afanasiev, Chairman of the Moscow Exchange:
“It is our pleasure to welcome the first Russian-law ETF to the Moscow Exchange. It’s rather special that the MOEX Index, the main indicator of the Russian financial market, is the underlying asset of the fund. ETFs are becoming more and more popular on international financial markets, mainly among private investors as they provide the opportunity to diversify investments even if only small amounts are spent. This type of investment is dynamically developing in Russia, with the Moscow Exchange already offering 14 international ETFs. We hope that new providers and new funds will emerge, and we are ready to offer our products and put together additional indicators to encourage this.”
What is the difference between exchange-traded funds and open-ended mutual investment funds?
ETFs and OMIFs are collective investment instruments which involve investors placing money in a common fund, which is managed by a professional manager. The difference is that ETFs are passively managed. The fund manager’s task is to ensure that the structure of the fund reflects the structure of the index as closely as possible. Open-ended mutual investment funds usually involve active management – the manager decides which securities to add to the fund and when to buy and sell them.
|Price||Price according to which units are bought and sold is not known in advance.||Price changes throughout the day. Buying and selling in accordance with the current price on the exchange.|
|Exchange||It’s possible to exchange the units of one fund for the units of another without paying commission or interrupting the holding period (important for taxation reasons).||It’s not possible to exchange units. It’s only possible to move money into a new fund by buying or selling units.|
|Fund structure||The structure of the fund’s assets is published on a quarterly basis. The top 10 positions of the fund are disclosed every month.||Structured in accordance with the index, whose structure is published by the exchange and accessible online.|
|Liquidity||Buy and sell orders are executed in the course of several days.||Buy and sell orders are executed instantly at market price.|
|Commission fees||Discounts and additional charges are possible. The level of commission fees are higher than those charged for passive funds.||Commission fees for management are lower than those of actively management funds. No discounts or additional charges.|
You can find further information about the fund and how to invest in it on the website of Sberbank Asset Management.
Sberbank is Russia’s largest bank and a leading global financial institution. Sberbank holds almost one third of aggregate Russian banking sector assets, it is the key lender to the national economy and the biggest deposit taker in Russia. The Central Bank of the Russian Federation is the founder and principal shareholder of Sberbank owning 50% of the Bank's authorized capital plus one voting share, with the remaining 50% held by domestic and international investors. Sberbank has more than 145 million customers in 20 countries. Sberbank has the largest distribution network in Russia with almost 15,000 branches, and its international operations include UK, US, CIS, Central and Eastern Europe, India, China, Turkey and other countries.
Sberbank CIB is the corporate and investment banking business of Sberbank. Its key areas of activity are corporate finance (including trade finance), the documentary business3, investment banking services, trade operations with securities, and private equity. Sberbank’s corporate and investment banking business provides integrated financial solutions and investment advisory services to its clients, which include major corporations, financial institutions, sovereign states and federal and sub-federal government bodies and organisations.