Russia ETF Finally Getting Unwound: What Investors Need to Know

After sitting in a frozen state for months, BlackRock is making a move on ERUS—the iShares MSCI Russia Capped ETF that got caught in limbo when Ukraine invasion triggered western sanctions.

The Situation

When Russia invaded Ukraine in early 2022, western sanctions made Russian markets effectively unreachable. ERUS stopped accepting new share creation on March 1 and halted trading entirely on March 4. Thousands of investors were essentially locked out of their positions with no way to exit.

Now What?

BlackRock’s board has approved a liquidation plan:

• Initial distribution: Scheduled for around August 17, 2022
• Full closure: Won’t officially happen until at least December 31, 2023
• The catch: Capital controls make it impossible to immediately sell Russian holdings, so the unwinding will happen gradually as opportunities emerge

Why This Takes So Long

ETFs hold baskets of actual securities. In this case, those securities are Russian equities—and with sanctions blocking access to Russian financial markets, there’s no straightforward way to liquidate them quickly. BlackRock will need to find buyers and navigate the restrictions as market conditions allow.

“It’s a reasonable approach,” according to industry observers. Shareholders get what they can now, and if any value can be recovered down the line, they’ll receive it.

The fund now enters a 16+ month holding pattern while BlackRock works through the unwinding process.