by Scott Ronalds
As Russia continues its invasion of Ukraine, western powers have stepped up their economic penalties in an effort to choke the Russian economy, starving it of the capital, liquidity, and foreign investment needed to function effectively.
President Putin is increasingly isolating his country from the global community and his aggressive tactics appear to have little, if any, support outside the Kremlin. The situation is fluid, and the world is watching closely. One can only hope that cooler heads prevail.
We posted a piece last week that provides some context on how markets have reacted in the past to geopolitical crises. The takeaway is that the relationship is not always direct; stocks are truly unpredictable in the near term. Investors can also take some comfort in knowing that any negative impacts on the broader market tend to be short lived.
Regional markets, and those less diversified, may feel a greater impact. Indeed, Moscow’s exchange (the MOEX Russia Index) has suffered immensely, tumbling roughly 45% this year, and at the time of writing, has been closed for three days. The rouble has also seen a precipitous decline.
The situation has some Steadyhand investors asking whether we have any Russian investments in our funds. The answer is no. Our fund managers focus on high quality businesses with proven and trusted management teams. They avoid companies with poor shareholder protections and have struggled to get around the governance challenges that come with owning stocks in countries with high levels of government corruption and limited transparency.
Our funds do not currently own any stocks in Ukraine or eastern Europe either. This is not because our managers paint the region with the same brush, but rather because they are simply finding better opportunities elsewhere, which they believe carry a lower level of risk.
If you have any questions about our fund holdings or your portfolio in general, we encourage you to contact us.
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