The hidden Russian equities in your portfolio
The odds are that, however strongly you feel against it, you hold Russian equities in your portfolio. Merryn Somerset Webb explains why.


I have JPMorgan Russian Securities in my portfolio. It’s down 65% in the last week. Worse, a month ago I put gold miner Polymetal in a list of income-producing mining stocks you might look at. It is down 75% in the last week alone. I did say that it came with an extra overlay of risk, but it was still a lousy suggestion.
Some of you will look at those numbers (based on its last dividend, Polymetal now comes with a 34% yield) and wonder if it is worth buying now (the answer being that anything related to Russia is now speculation, not an investment, so I don’t know). Many more of you will say that being invested in Russia in any way or form has long been both far too risky and downright wrong anyway – morality alone should have kept my money and yours away (John has never held Russian equities for that very reason).
You probably own Russian stocks
You may be right. But if so, there is something you should know. The odds are that however strongly you feel about this, you hold Russian equities too. Some 75% of those in work in the UK have an auto-enrolled pension (this is a very good thing). Almost all the funds that pension money goes into will have some exposure to Russia (now an obviously bad thing). Why? Because, as Patrick Hosking notes in The Times, most pension schemes “put their members’ cash into the low-cost vehicles that largely replicate the world’s big share market indices”. And most of those have some Russian equities included in them: the MSCI All Country World index has 0.38% Russian equities, for example.
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Funds are all run in different ways, of course – Nest, the largest pension scheme in the UK (ten million of us use it) has slightly less (0.2%) of its assets in Russia (or had – we have no idea what shares in the likes of steel maker Novolipetsk are worth now). Other than these, you will also almost certainly be holding shares in companies that have dealings in Russia – be that big oil, Apple or Diageo.
Some of you will be OK with this; some of you will not. But the key point here is that, in the main, you did not know. Most schemes have some way for you to change funds and some allow you to choose between various environmental, social and governance (ESG) options, but, as Hosking points out, there isn’t much specificity available: no scheme has been offering a “no Russia” box for you to tick.
Shareholders need their say
This matters. We should, at the very least, know what we own in our pension portfolios and it should be far easier for us to make choices about what we own. The big fund management groups have work to do here. Work in terms of education and transparency, but also in terms of engagement – asking us what it is we want from our portfolios.
This week, funds, organisations (including the Church of England and Nest) and companies are all loudly announcing that they are selling their Russian holdings (“as soon as it is possible”, says Nest hopefully) and stopping Russian operations (Apple has halted its product sales while Diageo has “paused” exports of alcohol to Russia). This is probably what most pension savers would prefer – but once again, no one has actually asked us. It would be better all round if they did.
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Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).
After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times
Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast - but still writes for Moneyweek monthly.
Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.
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