Small cap ETFs provide 'better' access to Russia

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Small cap ETFs may be a better way of accessing Russia's economy than investing in large cap funds, according to Morningstar's Ben Johnson.

Johnson, director of European ETF research at the firm, said broader benchmarks tend to have an international focus, while small caps often provide more direct exposure to the fundamentals of a domestic economy. Market Vectors Russia Small Cap, for example, shows a significantly reduced weighting in energy compared to most other Russia ETFs, and a substantial pickup in domestic sectors such as industrials and healthcare. Johnson said: "For a more concentrated bet on the advancement of the domestic Russian economy, it may pay to have a look at moving down the spectrum of market capital...

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