What is FXRL ETF, composition of the fund, online chart, forecast for 2022. ETFs and BPIFs are exchange-traded funds that invest in the stock market, money market instruments, precious metals or commodities. They follow some index or build a portfolio based on a popular strategy. FXRL is an exchange-traded fund from the Finex company, registered in Ireland, which contains shares in the same proportions as in the Russian RTS index. Investors can purchase FXRL for rubles or dollars.
The RTS Index consists of shares of 43 largest Russian companies and is denominated in dollars. Companies in the energy sector (oil and gas) rank highest, followed by finance and materials. But FInex, I undertake to repeat the dynamics of the RTS, reserves the right not to have some papers in the portfolio. The fact is that the RTS index includes low-liquid shares, and if the fund buys or sells them, this may affect the quotes. Therefore, highly liquid shares are purchased instead. Shares of ownership of the fund’s securities are slightly different from the RTS index. It is claimed that it does not matter much, the tracking error is 0.5% per year. Finex Management Company publishes the exact composition of the portfolio every day on its website https://finex-etf.ru/products/FXRL . FXRL fund’s all-time return [/ caption] Regardless of whether an investor buys FXRL for rubles or dollars, the dynamics of the fund depends on the exchange rate of the ruble against the dollar. The index includes shares of Russia, which are calculated in rubles, but it is denominated in dollars. It should be borne in mind that during the decline in the stock market, the ruble exchange rate falls sharply and the RTS index decreases more than the MICEX index. During the growth of the stock market, the ruble exchange rate can both rise and fall, and the RTS index will grow more slowly than the Moscow Exchange index. Investments in the RTS will fully justify themselves in case of simultaneous growth of shares and growth of the ruble exchange rate. Total cost of owning TER funds 0.9% per annum. This includes management fees, custodian fees, rebalancing brokerage fees, and administrative expenses. Specific costs for each item are not disclosed, the maximum losses of the investor are indicated. This amount is not paid additionally, but is deducted from the quotes. It is reported that TER is paid daily, but is deducted from the fund’s assets on a quarterly basis. The investor must pay the costs regardless of whether there is income from holding the ETF. The fund was founded in February 2016. This is a good period for the Russian stock market. The RTS index and FXRL are showing a strong bullish trend. The yield for the entire observation period was 154.11% in rubles and 151.87% in dollars, for 2021 13.64% in rubles and 10.26% in dollars. There were several major corrections, in some cases lasting 3-4 months, followed by a new high. Investments in FXRL are high-risk, the fund does not contain bonds, and therefore has the volatility of the stock market. It is worth investing in FXRL if you:
believe that the strong growth of the Russian stock market will continue;
are going to invest for a period of at least 3 months;
want to invest in US dollars;
you have little capital and cannot afford to collect a portfolio of Russian stocks;
have a portfolio that is highly diversified by asset class and geography;
afraid to buy futures on the RTS index, because of the automatically provided leverage.
What is more profitable ETF FXRL or BPIF SBMX: https://youtu.be/djxq_aHthZ4
How to buy FXRL ETFs
To purchase an FXRL ETF from Finex, you must have a brokerage account with access to the Moscow Exchange. If you don’t have an account, you can open one using the link on the official website of Phinex Buy ETF. To avoid paying taxes, you should purchase FXRL on an individual investment account or on a regular brokerage account with a hold of at least 3 years. You can deposit both rubles and dollars to a brokerage account to buy a fund. [caption id="attachment_13186" align="aligncenter" width="795"] Key information on ETF FXRL The fund can be found on the broker’s website or through a specialized application by entering the ticker “FXRL” or ISIN code IE00BQ1Y6480. Next, enter the required number of shares, the application will automatically show the cost of the transaction, and confirm the operation. The price of one share is only 39.2 rubles, so you can buy it with a minimum deposit. Due to the low cost, it is possible to very accurately calculate the required number of shares for the required weight in the portfolio.
FXRL ETF outlook
FXRL quite accurately follows the benchmark, the quality of Finex’s management is one of the best in Russia. The fund’s commission is considered high for the world market, but for Russia it is average. This is one of the best ways to invest in the Russian economy. However, the feasibility of long-term investments in the Russian stock market is questionable. Investments are under political and economic risks, Russia has been continuously under the threat of tougher sanctions since 2014. The Russian stock market has one of the highest dividend yields in the world, and it is still quite cheap relative to company profits. This indicates a propensity to grow over a period of more than 10 years. These two factors lead to the fact that periods of rapid growth are replaced by fairly deep corrections up to 25%. The fall in the market is due to statements by politicians about new sanctions, threats of military action, a correction in the US market or a fall in oil prices. This factor should be taken into account when investing in the FXRL ETF, buying it not monthly or quarterly, but after significant corrections. The RTS Index is one of the fastest growing global indices. From the beginning of trading in 1995 until 2022, he added 1400%. For comparison, the US SP500 index for the same period showed an increase of 590%. But unlike the US market, where growth on the weekly chart looks more like a line at an angle of 45 degrees, the RTS is stormy. Since then, Russia has experienced several severe crises that have devalued investments. If an investor had bought the RTS index at the highs in the spring of 2008, he still would not have recovered from the drawdown. if not averaging the position.
Since 2008, the MICEX index has shown an increase of 100%. This difference is due to the exchange rate of the national currency. The composition of both indices includes the same shares in equal shares. But the dollar exchange rate against the ruble doubled, firmly settling above 75 rubles. After the events of 2014, many analysts claimed that the ruble would regain its position and be back at 35-45. Currently, analysts tend to forecast 100 rubles per dollar. Thanks to the policy of the Central Bank, dollar quotes against the ruble became less volatile during shocks. It is too early to talk about the stabilization of the situation and the beginning of a trend towards the strengthening of the ruble. At the same time, the MICEX index is more predictable, because it indirectly depends on the national currency rate. Exporting companies are forced to take it into account. The RTS index will not be able to show significant growth even with the growth of shares of the Moscow Exchange, if the ruble exchange rate undergoes another shock. When buying an ETF FXRL, you should assess the possible risks and make a forecast for the dynamics of the national currency, you can purchase a small share for diversification. For investors who believe that the national currency will strengthen ETF FXRL is the best option for investing in the Russian economy.
