NUR-SULTAN – The Astana International Exchange (AIX) listed Russia’s oldest and most traded exchange-traded fund (ETF) Sept. 24 and two days later, Samruk Kazyna Sovereign Wealth Fund sold 9.86 million global depositary receipts (GDRs) through the London Stock Exchange (LSE) and the AIX.
The fund, ITI Funds Russian Equity (RUSE), replicates the return of the Russian Trading System (RTS) Index, the country’s largest index. It invests in 40 major shares traded on the Moscow Exchange (MOEX), providing diversified exposure to 12 industries.
AIX experts highlighted the strong demand through the exchange from both local and international investors. Samruk Kazyna has sold an aggregate of 9,863,021 GDRs (each representing interests in one ordinary share of Kazatomprom) at $13 per GDR.
“We continue to look to expand the range of products for our retail investors and today they have received yet another investment option. Exchange-traded funds (ETFs) offer many benefits and, if used wisely, are an excellent vehicle to achieve an investor’s objectives,” said AIX CEO Tim Bennett.
“We are very pleased to launch the second ETF on AIX. One click allows any investor to have exposure to 40 Russian equities with expenses as low as 0.65 percent annually with an entry ticket as low as $28. We believe that both our funds – equity ETF RUSE and Eurobond ETF RUSB – are robust investment products and they should find their place in the long-term portfolios of every investor. Our funds make investment available to anyone coupled with immediate liquidity, portfolio transparency and low cost,” said ITI Funds CEO Gleb Yakovlev.
The offering is the second ETF of ITI Funds listed on the AIX. Earlier this year, AIX listed and admitted ITI Funds Russia-focused USD Eurobond Undertaking for Collective Investment Scheme (UCITS) ETF.
Local investors bought $43.7 million in the secondary offering compared to $63.8 million in Kazatomprom’s IPO in November 2018.
“This is a significant achievement and it reflects the good progress being made in developing the local investor base,” added Bennett.
ITI Funds ETF is domiciled in Luxembourg and UCITS V qualified. Only physical replication is used and dividends are paid annually. Units of ITI Funds ETFs will be traded under the RUSE ticker with quotation and settlement in U.S. dollars and will be fully fungible between LSE, MOEX and AIX. AIX trading in these units began Sept. 26.
J.P. Morgan Securities acted as a sole global placement coordinator and joint bookrunner in connection with the LSE placing; Halyk Finance assumed the same responsibilities for the AIX placing. Renaissance Capital acted as joint bookrunner for the LSE and AIX placings, all of which were responsible for arranging the offering for both international and domestic investors.
ITI Funds is a fund platform combining the interests of investors and portfolio managers. It provides portfolio managers with the infrastructure to establish funds quickly and reduce operating costs and offers a range of products to private and institutional investors. More than 10 funds currently run on the ITI Funds platform.
