Troika Dialog lists ETF in Russia

Troika Dialog asset management has unveiled an ETF tracking the RTS Standard index on the RTS exchange in Russia.

The launch of Troika Dialog - Index RTS Standard represents the firm's first index fund offering, and marks the first such fund on Russia's collective investments market tracking the RTS index.

The underlying RTS Standard index comprises securities in the 15 most liquid and highly-capitalised firms on the Russian equity market. These include Gazprom, Sberbank and Lukoil.

The fund's liquidity will be driven by Troika Dialog Investment Company as market maker for the shares. The firm says the target bid-ask spread is 5-10 basis points.

Troika says it aims to minimise tracking error and keep it below 0.5% on an annual basis. On average, other index funds over the last 12 months diverged from the target index by 3.5%, according to Troika.

Troika Dialog Asset Management managing director Anton Rakhmanov says: "The launch of exchange-traded fund ‘Troika Dialog - Index RTS Standard' is timelier now than ever.

"Assessing the Russian market's prospects, one could say it is undervalued in comparison with other world platforms. Furthermore, the Russian market has only a limited supply of ETFs, while none of the foreign ETFs offered by the global banks reflect the structure of the local RTS and MICEX indexes."

A report by HSBC Global Asset Management says Russia is the most attractively valued Bric market at present, although the other countries should continue to prosper from strong domestic consumption.

The firm says although Russia is currently undervalued by the market, with the stock market trading at just five times 2011 price earnings, valuations are expected to revert in due course, with the fundamentals remaining robust and an opportunity for upside.