This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

New ETF Tracks Russian Small-Caps

NEW YORK ( TheStreet) -- Last week I wrote that the small-cap individual country funds were the new hot spot in the ETF world.

Well, this week we're going to take a look at another new entrant into this space, Van Eck's Market Vectors Russia Small Cap ETF (RSXJ).

A large-cap Russia fund, Market Vectors Russia ETF (RSX), has been quite popular since its debut four years ago.

The new, small-cap ETF is far more diverse than its large-cap brother and holds stocks that will be unfamiliar to most U.S. investors.

Not surprisingly, the large-cap fund is dominated by energy-related stocks, which account for 43% of its holdings. All the other sectors have much smaller weightings.

The small-cap fund allocates 18% each to utilities and materials, 17.5% to energy, 14.5% to industrials and 10% to consumer staples, with the remaining sectors having much smaller weightings.

At the individual stock level, the fund has 35 holdings and is reasonably well-diversified for what seems like a very narrow space. There are six companies with weightings ranging from 5%-8%, which should minimize the impact on the fund should there be a single-stock blowup.

It is important to note that not all of the holdings are Russian. The fund can invest in companies that derive the "majority of their revenues in Russia." That explains the inclusion of Central European Distribution (CEDC), which is domiciled in Poland and listed on the Nasdaq.

The small-cap fund will charge a net expense ratio of 0.67%. For now, there is no information on what sort of yield the fund might have.

Investors should note that the small-cap fund has a reported price-to-earnings ratio of 28, vs. 16 for the large-cap ETF. This means the small-cap fund is not cheap.

Before the wide proliferation of emerging market awareness and investment products it was very common for P/E ratios to be in the single digits. I take a high P/E ratio to mean there is less margin for error with this fund.

Russia is one of the most complicated foreign markets to own. There are political threats to company managers and operations. The most glaring example of this would be the Yukos case several years ago, which showed that the Russian government is capable of shutting down individual companies.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
RSX $17.14 0.18%
RSXJ $21.33 0.00%
AAPL $121.44 -0.76%
FB $96.00 0.83%
GOOG $630.42 -0.34%

Markets

Chart of I:DJI
DOW 17,755.27 +9.29 0.05%
S&P 500 2,113.43 +4.80 0.23%
NASDAQ 5,149.4540 +20.6690 0.40%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs