Updated July 16, 2008

First foreign fund with the Russian stock exchange index appears before long. Japan’s investment bank Nomura has registered a fund with index of RTS stock exchange (Russian Trading System). In market participants’ opinion, foreign investors are interested in the Russian index in terms of quotations growth’s prospects of the energy sector companies foremost, as RTS index lists their stocks mainly.

Information about Nomura investment bank intention to establish a fund of RTS index is posted at Osaka Securities Exchange web site. According to the stock exchange report, Next Fund Russia RTS Linked Traded Fund with $50 million volume will be listed on July, 29. The fund stocks’ number totals from 15 million to 25 million.

Units of open index funds – Exchange-Traded Funds (ETF) – circulate on a stock exchange. ETF assets structure resembles a structure of that index to which a fund has been established, and its profitability directly depends on index dynamics. According to sources data, average funds’ profitability, which assets structure corresponds RTS index, totaled from -7 to -14% since early year, and MICEX index – from -11 to -16%. Now 46 index funds are registered in Russia.

Nomura fund becomes the first foreign fund established with the Russian index. Such funds have been earlier established by Russian managing companies only.

In their turn, western players prefer to establish funds with indices of such families as S&P, MSCI, NASDAQ, Dow Jones. Despite negative profitability that index funds have been demonstrating within the last months, experts suppose that Nomura has chosen the right moment to establish such fund. "It is rather favorable to enter the falling market, as this permits the company to show good profitability in a long-term prospect related to the market growth directly", considers KIT Fortis Investments director general Vladimir Kirillov.

In analysts’ opinion, structure of RTS index should provide its growth. "Western indices are more extended in terms of presented companies’ range, while 90% of Russian indices comprises securities of oil and energy sector companies", marks Otkritie Company top assets manager Sergey Danilyuk. Among 50 companies presented in RTS index, oil companies’ capitalization totals 52% from overall index capitalization. By comparison: among 30 companies presented in Dow Jones index only two belong to the oil sector. "In terms of high price growth rates to energy recourses and oil, Nomura fund has rather high chances to receive high profitability", considers Metropol Company top portfolio manager Arseniy Yegiazarov. "Profitability of any index fund in a long-term prospect is higher, as compared to funds based on fundamental and technical indices", marks Olma Company business manager Tatyana Krotkova.