Interactive Investor

Jupiter to close fund that heavily backs Russia

5th May 2022 13:09

Sam Benstead from interactive investor

The move indicates other strategies could follow suit following a raft of fund suspensions in March. 

Jupiter Asset Management will close its £49 million Emerging European Opportunities fund due to market disruption following Russia’s invasion of Ukraine.

The strategy, which predominantly invests in Russian stocks and was launched 20 years ago, was suspended in March after the start of the invasion which “severely impacted trading conditions” for Russian shares.

Its largest holdings when it shut were gas giant Gazprom, oil firm Lukoil and Sberbank of Russia.

It was among a handful of funds to suspend, including Barings Eastern European and BlackRock Emerging Europe. In total, more than £2 billion of investors’ capital has been trapped. 

Jupiter said: “The ongoing conflict between Russia and Ukraine has severely impacted trading conditions in the markets in which the fund primarily invests, negatively affecting our ability to value certain assets in the fund. The fund has remained suspended throughout this period, during which we have closely monitored the situation and continued fund suspension.

“After careful consideration of all relevant issues, we believe that the closure of the fund is in the best interests of its investors, allowing us to return a level of cash to investors earlier than we expect would otherwise be possible.

“Investors in the fund have been informed of this decision and will be kept updated throughout the process.”

Jupiter has applied to the Financial Conduct Authority to close the strategy and will wind it up subject to regulatory approval being granted.

Jupiter is the first investment manager to shut a Russia fund following the invasion, but more firms could follow suit.

Many Russian companies are now under sanctions in Britain, Europe and the United States. The European Union, which gets about 40% of its gas from Russia, is preparing to completely remove it from its energy supply chain. 

Trading in some Russian companies listed on the London Stock Exchange has also been suspended. While the Moscow stock exchange initially shut following the invasion, it reopened at the end of March. However, non-Russian nations are still blocked from trading.

Given that fund managers cannot sell stocks, money cannot be raised to meet withdrawals when investors want to sell, which is why funds with a large slice of money in Russia remain suspended.

The largest funds that are currently suspended include the £1.3 billion Schroders ISF Emerging Europe, £489 million Barings Eastern Europe, and £475 million Pictet Russian Equities fund.

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