BlackRock Inc. will begin a long process of shuttering a major Russia exchange-traded fund, after the protracted Ukraine war has slashed the value of securities linked to the region and left their fate in limbo.
The iShares MSCI Russia ETF (ticker ERUS) will begin closing on Aug. 17 and proceeds from the few assets that can be liquidated will be distributed to shareholders, BlackRock announced in a press release on Wednesday.
Most of the fund’s holdings currently can’t be sold due to sanctions or trading halts, so BlackRock expects the entire liquidation of the fund to take “an extended period of time.”
ERUS is the first major Russia-focused ETF in the U.S. to liquidate. The fund once held over $800 million at the peak of its assets in 2018, but the value of its holdings tumbled to effectively nothing in the wake of the Ukraine invasion.
Russia-focused ETFs based in Europe, including two offered by BlackRock, had already started closing earlier this year.
ERUS primarily holds Russia ordinary shares, which the Russian government has barred foreigners from selling, as well as depository receipts that are currently halted on US and UK exchanges.
The few holdings that can be dispersed to shareholders are cash that the fund holds and proceeds from a money-market fund.