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Using ETFs to Capture the Dynamics of Aging Demographics

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RUSSIAN ROULETTE
DailyFeed
There is a new ETF investors can now use to invest in Russia.

San Francisco-based iShares recently launched iShares MSCI Russia Capped Index (ERUS), a single-country ETF that offers investors exposure to Russia. ERUS' biggest holding at inception is natural gas giant Gazprom, which accounts for more than 21% of the ETF's assets.

Morningstar analysts note that Russia is one of the more volatile emerging-markets countries, despite being the world's 12th-largest economy. But they argue that Russia is positioned nicely to benefit going forward both from the current global economic recovery and also from rising domestic consumer spending. However, they do caution investors that corruption remains a major risk in investing in Russian equities.

Here’s another reason for possible caution: the population in Russia is disappearing.

In his morning missive today, Dennis Gartman, citing recent data from Foreign Affairs magazine, calls demographic trends in Russia simply “horrid.” The longtime trader and editor of The Gartman Letter notes that, since 1992, more people have died each year in Russia than have been born. Furthermore, since 1992, the actual population of Russia has fallen from 148.6 million to 141.9 million and the trend is down, not up.

The news from Russia just keeps getting worse: while life expectancy almost everywhere else in the world is high and rising, it is low and falling in Russia. There, overall life expectancy is actually now a bit lower than it was in 1961, almost half a century earlier.

According to Gartman, Russia’s only glimmer of demographic hope? Immigration.
POSITION:  No positions in stocks mentioned.

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