AN iSHARES ETF UPDATE ON THE RUSSIA-UKRAINE CRISIS


iShares Apr 11, 2022

UPDATE: On March 10, we published a list of actions BlackRock had taken in response to the Russian attack on Ukraine. This post was updated on April 11, to reflect developments related to index changes and the status of the Russian marketplace.

BlackRock stands with the Ukrainian people and condemns the brutal aggression of the Russian government. As our CEO Larry Fink stated in March, this is a horrific humanitarian tragedy and BlackRock is seeking to do what it can to provide support to all those impacted.

As of the end of February, Russian securities accounted for less than 0.01% of our clients’ assets, mostly in our index portfolios, which seek to track indexes that have, or until recently had, Russian investment exposure. Please follow this link to see our ETF holdings of Russian securities as of Feb. 18, 2022, the last trading day before the Russian escalation of hostilities, which can be compared with current holdings on individual fund webpages.  

As we manage your investments throughout this crisis, below is a summary of the actions we have taken to date:

  • BlackRock suspended the purchase of Russian securities in our active and index funds on Monday, Feb. 28, 2022.
  • All major index providers began the removal of Russian securities from their indexes beginning the week of March 7, including from many broad-based international and emerging markets indexes that iShares ETFs seek to track.
  • We will continue actively consulting with regulators, index providers and other market participants to help ensure our ETFs can exit their positions in Russian securities, consistent with removal of the securities from applicable underlying indexes, whenever and wherever regulatory and market conditions allow.
  • We suspended the issuance of shares in the iShares MSCI Russia ETF (ERUS) on March 1, and trading of ERUS was halted on U.S. exchanges on March 4.
  • BlackRock Fund Advisors (BFA) waived the accrued management fee on ERUS for the month of February 2022 and began voluntarily waiving its management fee for ERUS starting in March 2022. This voluntary waiver may be eliminated by BFA at any time.
  • As of April 7, the Moscow Exchange is open for local investor trading activity only, and the Moscow Exchange has not yet communicated or issued plans to re-open for non-resident trading activity.
  • BlackRock’s Pricing Committees determine fair market values for the Russian securities in our index portfolios through a formal process governed by a pricing policy.
  • We are monitoring the market quality of all our ETFs to ensure that the surrounding ecosystem system is strong and performing as expected.
  • BlackRock has three primary objectives when managing index funds in accordance with their investment objective: 1) maintain tight tracking relative to the benchmark index; 2) minimize market impact around the index change event; and 3) minimize transaction costs. We will continue to assess best methods to manage impacted portfolios in accordance with these best practices.
  • We will continue to manage our funds as a fiduciary, taking a disciplined, pragmatic and adaptable approach to reflecting index changes, while remaining in compliance with all sanctions.

Russia’s unprovoked attack on Ukraine is a tragedy and has created a highly complex and fluid situation. BlackRock provides specific guidance on funds or market conditions as needed.