Short positions... the big freeze on Russian assets

Stock exchanges globally have halted trade in exchange-traded funds (ETFs) tracking Russian stocks, reports the Financial Times. The move came after Russia’s invasion of Ukraine and the ensuing sanctions resulted in the closure of the Moscow stock exchange, meaning the underlying stocks became impossible to trade, while the price of Russian stocks listed overseas plunged to near-zero (see page 46). Only one ETF in the world – Tokyo-listed Next Funds Russia – is thought to still be trading, says Bloomberg. The move has left investors in these ETFs with no exit route, until and unless trading restarts. Meanwhile, several actively-managed funds with exposure to Russia have been suspended indefinitely too, including funds from JPMorgan, Schroders, BlackRock and Liontrust. Some such funds have come in for criticism for continuing to charge management fees, although Liontrust has said that it will waive fees dating back to 1 March, the day after the fund was suspended.

Fund manager Janus Henderson has suspended its £1bn open-ended property fund amid wider uncertainty over the sector’s future, says Citywire. Open-ended property funds promise to allow investors to withdraw their money whenever they like, but the underlying assets – commercial property – cannot be sold rapidly to fund redemptions. This fundamental “liquidity mismatch” saw trading in most such funds halted at the start of the pandemic, with more than £20bn of investor cash trapped at one point. The regulator is looking at potential solutions, but investor faith in the sector has been badly damaged – assets under management at the Janus fund have fallen from £2bn. Janus is aiming to sell the portfolio to a single buyer, and hopes to return the proceeds to investors by the end of April.