It’s the question on everyone’s mind so we asked two of our fund companies, NEI Investments and Desjardins, about their positions in Russia and here is what they have to say:
NEI Investments: "NEI’s exposure to Russian securities across its funds is negligible, as our sub-advisors had already begun to reduce or eliminate their holdings prior to the invasion. As of March 3, 2022, there was zero exposure to Russian sovereign debt or currency, and less than 1% exposure (three equity holdings) representing $3.55 million in our NEI Emerging Markets Fund."
- Note from Ryan: Our clients do not hold the NEI Emerging Markets Fund.
In addition to low exposure, NEI is engaging in divestment and corporate engagement tactics:
- Implement an immediate moratorium on the purchase of any new Russian sovereign debt and bonds or equities issued by Russian-domiciled companies.
- Direct sub-advisors to divest of any existing Russian securities as soon as possible, recognizing that capital markets trading restrictions currently in place make it extremely challenging to set a time frame for completing the process.
- Through corporate engagement, influence companies that operate in Russia or have other economic interests there to publicly align with international efforts to maximize economic pressure on Russia, such as by pausing or ending their involvement in the country.
NEI stance against Russia includes divestment plus corporate engagement (newswire.ca)
Desjardins (Impax Asset Management - Cleantech) “The first thing to say is that we cannot claim any insight into what Putin is doing, however, the political risk that comes with investing in Russia is an area that we have always been cognisant of, and your portfolio’s exposure to Russia has always been low. Your portfolio currently has less than 0.15% in Russian assets (based on the Desjardins Global Equity Growth Fund at c.o.b yesterday) – with the vast majority (approx. 0.11%) invested in Sberbank, Russia’s largest bank and a very small (approx. 0.02%) amount invested in Mail.ru/VK Co, Russia’s second largest internet business.” March 24, 2022 Baillie Gifford (Global Alpha / Global Equity strategy)
- Impax has no direct holdings in either Russian or Ukrainian securities
- Direct revenue exposure to Russia and Ukraine in companies held within Impax strategies is very limited
- As you know, the current tension has led to inflationary rises in oil, gas, and soft commodities. This has led to strong performance from names in the MSCI GICS Energy sector, to which Impax strategies do not have exposure.
- There are potential secondary effects on Impax listed equities strategies from these rises in commodity prices:
- Impax expects the rising cost of energy and oil derivatives will impact companies to varying degrees depending on their hedging policies and ability to pass through higher input costs;
- Impax also expects this rise in input prices to drive an increased focus on energy efficiency as longer-term, energy spikes tend to accelerate the shift to decarbonise;
- At a policy level, security of energy supply concerns will increase, further prioritising the shift away from fossil fuels such as natural gas;
- Rising global soft commodity prices tend to increase farmers’ income which can lead to greater demand for agricultural and irrigation equipment;
- Impax will position its strategies to take advantage of share price falls in companies where we believe they have been sold more on sentiment than for reasons relating to changes underlying earnings or long-term fundamentals.
- We believe that our quality holdings will be among the first, and strongest, to recover as the geopolitical situation stabilises.
If you want to talk further with Ryan please call the office or drop us an email.
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