db X-trackers MSCI Russia Capped

Index constituents with weightings greater than 25 per cent are capped daily to 22.5 per cent and quarterly to 20 per cent. The ETF is heavily weighted to the energy sector, with more than half (55.69 per cent) its assets invested there. This is not surprising given that the oil and gas sector represents a large chunk of the Russian economy – the top two holdings, Gazprom and Lukoil, together make up more than a third of the portfolio. While the Russian market is heavily exposed to the energy sector, an active manager can manage these positions – although few active managers will be able to offer exposure to Russia at the competitive fee of 0.65 per cent all-in charged by the ETF. Most active managers charge fees near 2 per cent.

State-owned enterprises have been encouraged by the government's pro-investment policy to raise their dividends payout ratios, and now a number of Russian blue-chip companies have sustainable dividend yields. This is reflected in the ETF, which offers a dividend yield of more than 2.5 per cent – most active funds offering exposure are focused on capital growth and offer little if anything in the way of income. The ETF has distribution status.

While ETFs may suffer tracking differences compared with the underlying index due to the impact of annual fund management fees, the db X-trackers MSCI Russia Capped Index Fund has done a good job of tracking its index, with tracking error since launch of -1.48 per cent.

Source: db X-trackers

Performance figures as at 18 July 2012

Top 10 index constituents (as at 18 July 2012)

Sector breakdown (as at 18 July 2012)