Fund managers including Danske, Nordea and Jupiter have taken steps to permanently close funds with heavy exposure to Russia, the latest sign that investors do not expect the country to rejoin global markets for many years. .
Most funds holding large holdings of Russian securities have been frozen since early March, shortly after Russia invaded neighboring Ukraine. The suspensions trapped billions of dollars in investor capital after Moscow markets closed and offshore asset prices plummeted.
A series of punitive Western sanctions and Russian countermeasures – including a ban on foreigners trading on the Moscow Stock Exchange – have made it virtually impossible to price and trade positions.
The investment arm of Danish bank Danske Bank announced that it had started liquidating its three Russian and Eastern European funds from the end of April. “Given the escalation of the conflict and the challenges related to the liquidity and settlement of the funds’ investments, we do not consider that the reopening of the funds is in the best interest of shareholders, therefore it is not contemplated,” Danske said.
The value of the funds’ assets was low and not expected to increase in the near future, while the cost of liquidation will be borne by the company, Danske added.
Nordea Funds also said it would exit all Russia-related investments and liquidate its Russian fund, with the first payout to unitholders scheduled for August 31. time before all holdings in the fund can be sold,” Nordea warned.
In the UK, fund manager Jupiter said it had asked regulators to shut down its Emerging Europe fund and would proceed with liquidation once approved. Swedish asset manager Carnegie Fonder will only allow units of its Russian funds to be sold once trading resumes. Swedbank said it “would not offer its Rysslandsfond [Russia fund] in the longer term” and would divest itself of its Russian holdings when the market permits.
“As long as the market is closed, it is difficult to make any further decisions regarding the future of the fund, especially since the majority of the fund is held by Swedish savers. It is our legal responsibility to do what we can to preserve their savings,” Carnegie Fonder said.
“However, since it is now impossible to see a bright future for Russia, and impossible to make an adequate analysis of the Russian financial market and Russian companies, we have decided to close the fund for new investments.”
Foreign investors – from hedge funds to pension plans – held around $170 billion in Russian assets at the end of 2021. Asset managers including JPMorgan, BlackRock, Amundi, UBS, BNP Paribas, Abrdn, Schroders and Pictet, have all frozen Russia-focused funds since the invasion but did not say whether they would be closed permanently.