EM specialist Da Vinci Capital launches first ETFs in Europe

Da Vinci Capital, an emerging markets asset manager with offices in Moscow and Hong Kong, has entered the European ETF market with the launch of two Russia-focused ETFs.

The new ETF platform, branded ITI Funds, is an extension of its existing emerging markets proposition.

The two ETFs – one equity fund and one bond fund – are both available to trade on the London Stock Exchange, and are due to launch on the Moscow Exchange in the next few weeks. They are the first of a number of ETFs the firm plans to launch which give investors exposure to emerging markets.

The ITI Funds RTS Equity UCITS ETF (RUSE LN) uses physical replication to track the RTS index. The RTS is made up of 45 equity securities of Russia’s top companies by market cap and liquidity.

Its sector exposure is heavily weighted towards energy stocks at 49% of the total index weight, with the next largest exposures being 19.4% in financials, 16.6% in materials and 4.6% in consumer staples. It is heavily weighted towards large-caps at 89.7% whilst mid-caps represent just 10.3% of the total exposure.

The fund has a total expense ratio (TER) of 0.65%.

The ITI Funds Russia-focused USD Eurobond UCITS ETF (RUSB LN) tracks the ITI Funds Russia-focused USD Eurobond Index calculated by Solactive, which is comprised of 22 Russian sovereign or corporate USD-denominated Eurobonds.

Eurobonds included in the underlying index must be bullet bonds only and have an amount outstanding at least $750m. The index limits a maximum of two issues per corporate issuer and can only track bonds which are equivalent or higher than Russia’s sovereign rating – currently the index is composed of 4% BBB-rated bonds, 13% BBB- and 82% BB+.

The fund has a TER of 0.50%.

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