The withdrawal of bottles of Russian vodka from the shelves of the SAQ has made many Quebecers laugh, for whom the initiative seems as ridiculous as it is useless. Others, on the contrary, believe that this symbolic gesture deserves to be made, in the same way as a solidarity march 7000 km from the conflict or a small flag affixed to their Facebook profile picture.
What about your investments, should the slightest traces of Russian companies in support of the Ukrainian cause be purged?
I am less comfortable guiding you in managing your conscience than your finances, you will do what you want.
Here is where you are likely to find Russian companies in your portfolio.
There is only one way to invest in the Russian economy, and that is through exchange-traded funds (ETFs) and mutual funds (FCPs).
I found four ETFs specializing specifically in this market, including the iShares MSCI Russia fund. Very sharp, I wonder who can take a position there. After all, the Russian economy is heavily concentrated in the natural resource sectors, especially gas and oil. Anyone who believes in the future of fossil fuels has no shortage of investment opportunities right here in Canada, where companies are not controlled by the state.
There is, however, a more common fund category that contains a significant portion of Russian companies, emerging market funds. The weight of these companies within the funds varies considerably, however it seems to be greater in the funds that pay dividends. Apart from a few rare exceptions, Russia accounts for less than 10% of these investment products.
As for mutual funds, the financial information site morningstar.ca published this week a list of the 10 funds with the most Russian content. This fluctuates between 16% and 8%. All still belong to the category of “emerging markets” funds.
The place occupied by companies from Putin’s country seems more important in actively managed mutual funds than in index ETFs. In the latter, the weight of China, with its innovative and dynamic economy, naturally crushes Russia. In actively managed funds, the stronger presence of Russian companies is maintained by managers.
This leads us to wonder about funds specializing in emerging markets.
There are economies as diverse as those of China, Russia, India, South Africa and Mexico, to name a few. Me, it seems to me to be anything.
People much more expert than me say that any good investor should make room for emerging market funds in their portfolio. Others, no less specialists, say the opposite.
These products present a high risk and, therefore, should occupy only a tiny part of its investments.
I wonder about their relevance, like that of many niche products.
– Should you review the distribution of your portfolio, turn to safe securities, exit the stock market?
-Those who know me will have guessed my answer: do not touch anything. We are going through a period of high volatility, and if you take refuge on the sidelines, you risk missing the rebound.
– Fasten your tuque, and if you find that the carousel ride makes you nauseous, see it as an enriching experience and ask yourself about your true investor profile.