Major asset managers, including J.P. Morgan Asset Management and BNP Paribas Asset Management, have suspended funds sold in Asia which have Russian exposure and slashed allocations to Russia and Belarus assets in the wake of the invasion of Ukraine.
According to investment consultancy Morningstar Inc, there are 117 funds with exposure to the Russian market in Asia. Some managers have temporarily frozen the funds since Russia invaded Ukraine on February 24.
J.P. Morgan Asset Management has suspended its Russia equity fund and emerging Europe equity fund in Hong Kong and Singapore.
“We’re closely monitoring the risks and remain focused on acting in the best interests of our clients and shareholders…The suspension will be reviewed on an ongoing basis,” a spokesperson for the US asset management company tells Asia Asset Management (AAM).
France’s BNP Paribas Asset Management, too, has suspended its Russia equity fund and Europe emerging fund in Hong Kong and Singapore because of the “deterioration of market conditions”, a company spokesperson says.
Franklin Templeton is looking to cut its already minimal exposure to Russian and Belarus assets in a “thoughtful way”, according to a spokesperson for the US asset management company. It won’t make any new investments in Russian and Belarus sovereign or corporate debt as well as equities across public and private markets, she says.
Belarus has not directly taken part in the invasion but supports Russia in the war.
“Even prior to Russia’s invasion of Ukraine, Franklin Templeton had approximately 0.5% assets under management exposure to Russia and Belarus at a firm level. Current exposure is a fraction of that,” the spokesperson tells AAM. “We are reviewing options to further reduce our existing exposure to Russia and Belarus in a thoughtful way.”
The extent of fund redemptions triggered by the war is unclear.
According to Evonne Gan, associate director of Asia Pacific Insights at Broadridge Financial Solutions, it’s difficult to estimate the amount at this stage. But she notes that Asia Pacific-domiciled funds with exposure to the BRIC countries – Brazil, Russia, India and China – and to central Europe had already been doing poorly since last year, with rolling 12-month outflows to January 2022.
“In general, [Asia Pacific fund] markets are expected to remain volatile in the foreseeable future,” Gan tells AAM.