Asset managers freeze $3 billion in Russia funds in market turmoil

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© Reuters. FILE PHOTO: The Amundi company logo is seen at their headquarters in Paris, France, October 7, 2015. REUTERS/Philippe Wojazer
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By Carolyn Cohn and Simon Jessop

LONDON (Reuters) -Asset managers including France’s Amundi and BNP Paribas (PA:BNPP), Britain’s HSBC and Switzerland’s Pictet have frozen Russia-focused equity funds totalling over $3 billion in assets, as markets seize up following sanctions on Russia.

Russian assets have gone into freefall due to the crippling restrictions, and Moscow has placed temporary curbs on foreigners seeking to exit them.

Asset managers typically only suspend funds in exceptional circumstances, including when assets are hard to value, in order to ensure investors are treated equally.

Pictet said in a notice to shareholders dated Feb. 28 that it had suspended its Russian equities fund “in light of the current and ever-evolving circumstances associated with Ukraine/Russia situation, the current political situation and liquidity constraints”.

It said it would reopen the fund “as soon as the market conditions allow”.

The fund has $637 million in assets, according to Morningstar data.

DWS and HSBC suspended Russia exchange-traded funds — funds which track an index.

Amundi said it suspended three equity funds with exposure to eastern Europe, and BNP Paribas said it was not calculating a valuation for its Russia fund while the Moscow exchange was shut.

JPMorgan (NYSE:JPM) said Western sanctions and Russian restrictions curbed the ability of its London-listed Russian securities investment trust to pay dividends.

Barings said it valued Moscow stocks in its emerging EMEA opportunities investment trust at zero.

British asset manager Liontrust suspended dealing in its Russia fund, and Swedish fund managers Swedbank, Carnegie, East Capital and Handelsbanken froze their Russia-exposed funds.

Sweden’s Pension Agency said it stopped buy orders in four Russia funds in its pension fund marketplace platform, as it assesses whether the funds are suitable for ethical and risk reasons.

Sweden has a system which allows pension savers to allocate a portion of their state pension savings to a number of approved funds.

Nordic lender Nordea went beyond equities and said it had decided to exclude all Russian investments, including government bonds, equities and bonds from its funds.