Russian ETF: Yuh has just deleted it and the history from my account: But where are they? Who do they belong to?

Investing / Brokers
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I have a general question:

At the beginning of the conflict in Ukraine, I’ve had Russian Blue Chips ETFs in my Yuh account. However, as is well known (but perhaps not very well understood… as in my case!), many ETFs exposed to Russian stocks have been ‘eliminated’ (forgive my perhaps wrong expression, I’m not a financial expert, that’s why I’m asking this question here!)

Yuh has completely deleted these ETFs from my account, there’s even nothing left to say that I am/was holding them. I haven’t received a single CHF in return. I have asked Yuh several times (and never got an answer!!!) how this will be handled in the future or how this is to be understood: I mean, I am aware that it is no longer possible for western people/institutions (at the moment…) to trade Russian stocks etc., but that doesn’t mean that they are gone. And as far as I know, the Russian government hasn’t ‘stolen’ / acquired for free these stocks that belong to foreign people/ETFs. These shares are still around somewhere, so if the situation changes again one day, won’t I be entitled to have access to my old ETF or the underlying shares? I ask this question because I haven’t been able to find an explanation anywhere. As I said, these shares are out there and they belong to someone, as far as I know!

It would be nice if someone who knows more about this could give me some information on that. I really have the impression that I’m being cheated somehow (by Yuh, the ETF issuer or someone else), as it’s my understanding that these stocks are still somewhere and nobody from the Russian side has officially declared this to be stolen (AND PLEASE, DO NOT START A POLITICAL DISCUSSION, THAT’S NOT THE QUESTION HERE!).

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My understanding is that the fund invested in swaps rather than actual equities. The swaps expired worthless, couldn’t be rolled over and thus, the fund was liquidated with a value of zero or close to it. The assets (swaps) don’t exist anymore, that is a risk with derivatives.

I’m not familiar with swaps and my understanding is lacking in many ways, however. Others may be able to explain it better.

Here’s my source:

Edit:
From here: yuh ETF Liste 2023: Diese ETFs kannst DU handeln | Finanzen selber managen
Xtrackers was the issuer of the fund.
Its full name was: Xtrackers MSCI Russia Capped Swap UCITS ETF 1C.
Its ISIN was: LU0322252502.
It was traded on Xetra.

A search with a combination of these elements and something like “liquidation” or “what happened to” might yield some results.

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A case against synthetic funds.

My apparently non-synthetic ETF is still in the depot with zero value. (Consorsbank Germany)

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I do have a short position on a physical ETF Ishares ERUS with IB.
It was non tradable between April and August last year and I paid 80% interest borrow rate for maybe 500$ value

Now the value is 0.04$ and it has been renamed ERUS.ESC

P/L is 1500$, and I guess it will stay for a while on my portfolio.

No more gamble for now: VT CHPI SMMCHA

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UCITS funds are required to hold a substitute basket. And while the underlying securities may be untradeable (for a western audience), they don’t become worthless. If you have an actual claim on them:

“While swaps allow counterparties to avoid the slippages, costs and other frictions involved in trading physical exposures, RDXS’s synthetic methodology meant, unlike those holding GDRs, it had no claim on the underlying shares. Effectively capturing derivatives on another derivative priced at zero, swap deletions meant investors recouped none of their money.“

Source: Can any ETF assets escape from Russia?

If you google the available funds and according to this 3rd party site, Yuh seem to have offered LU0322252502:

Thankfully, my Sberbank shares at IBKR are alive and even up 22% above my purchase price, although not tradeable and held in escrow currently.

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Thanks. It is not clear to me what underlying assets the fund held.

My understanding from the notice to shareholders is that:

  1. The fund could no more pursue its investment objective.
  2. The Board of Directors decided to terminate the fund, which triggered a calculation of the NAV of the outstanding shares and their redemption.
  3. All investments and liabilities of the fund have been realized.
  4. It was expected, and I guess it is what has happened, that the value of the investments (including the underlying? I still haven’t found what those were) was zero or near to zero.
  5. After costs, the value of the shares was zero and no payment was made to the investors who held shares of the fund.

In your understanding, do I understand correctly that, absent the termination of the reference index and the decision from the Board of Directors, the fund could have kept holding its underlying assets and that those could have regained value with time, but costs would have been incurred along the way?

I still can’t make full sense of this situation. Mostly, I don’t understand what the underlying basket of securities related to the swaps was.

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Mostly Polish and US stocks, if I’m not mistaken (see page 196 here).

From my (albeit limited) understanding, synthetic funds could just continue holding their swaps - until either the cancellation of the index (which was eventually cancelled) or the at least the end of the swap term (at which point they may be legally prohibited from renewing).

It’s just that the index providers decided to set the index value to a value of zero. And that’s the “performance” the fund holders received. The swap is designed and agreed to provide the performance of the index, isn’t it?

Fully replicating funds had the option of converting their international GDRs/ADRs to local shares (when Russia forced companies to terminate their international depository receipt programmes), which at least Blackrock did on their iShares fund - and these assets could potentially be sold later, and distributed to shareholders.

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