COMPARATIVE ANALYSIS OF INVESTING INTO RUSSIAN SHARES: MUTUAL INVESTMENT FUNDS OR EXCHANGE-TRADED FUNDS

With the introduction of a new financial instrument – an exchange-traded fund – more and more questions arise about its effectiveness and advantages over other financial instruments. The exchange-traded funds market is growing by average 30 % annually. For the past ten years, assets run by ETFs have grown faster than assets of popular mutual funds. The purpose of this study is to consider the options for investing capital in Russian stocks, and choose the most effective financial instrument currently available. The paper presents the detailed calculation of investment in the Russian Unit Investment Fund (UIF) “Opening – MICEX Index” and the largest foreign exchange-traded fund based on the Russian stocks Market Vectors Russia ETF (RSX). As a comparison, the authors provide data and calculations of investment in the US exchange-traded fund SPDR S & P 500 ETF. In this case, two options for investing are considered: one-time and annual investments. The results enable to choose the most effective tool and a way of investing the funds. Moreover, the paper reveals the main difficulties in the market development of exchange-traded funds in Russia, and absence of proper legislative framework is one of the key issues. In Russia, the exchange-traded funds are regulated like unit investment funds; thus, they are deprived of benefits, and the idea of creating such a tool that has received a general spread on the global financial market loses its sense. The authors provide recommendations to solve the existing problems, as the interest in exchange-traded funds on the part of private and institutional investors is great, but at the moment, the market is only trading the foreign exchange-traded funds.