The war in Ukraine – Danske Invest FAQ

(Updated 29 April due to Danske Invest closing funds with Russia and Eastern Europe as strategies)

Russia’s invasion of Ukraine has triggered a global crisis that is affecting much of the international community. This is also the case for the financial markets and you as an investor. Naturally, the war is also influencing the agenda at Danske Invest. Below, we answer some of the questions you probably have as an investor in a Danske Invest fund.
 

What is Danske Invest’s overall position on the war in Ukraine?

We are very moved by the consequences of the war and feel deeply committed to showing our support for Ukraine. The Russian invasion is irreconcilable with Danske Invest’s Responsible Investment Policy, which has subsequently resulted in the introduction of various restrictions on our investments in Russia. Danske Invest is part of the global financial system and thus plays a key role in ensuring the sanctions imposed on Russia are implemented in a timely and expedient manner.
 

What restrictions has Danske Invest launched with respect to Russia?

Together with Danske Bank, we have decided to exclude Russian government bonds and Russian state-owned enterprises from all our portfolios in accordance with our Responsible Investment Policy. Going forward, we will work to divest these investments from our portfolios to the extent this is possible given our obligations and opportunities to trade in the market.
 

Which Danske Invest funds have investments in Russia?

For our Danish investors, our exclusion policy primarily affects the equity fund Danske Invest Eastern Europe. We also have the equity fund Danske Invest Russia, which is based in Luxembourg. Common to both of these strategies is that Russian investments account for the majority of the portfolios. This is also why they have been closed for trading since the Russian stock market closed on 25 February.
 
The following Danske Invest strategies include only a small number of Russian investments compared to total assets: Danske Invest Emerging Markets Debt, Danske Invest Emerging Markets, Danske Invest Emerging Markets Small Cap and Dansk Invest Index Emerging Markets Restricted, etc. The proportion of Russian investments in these strategies is currently falling sharply and approaching zero. You can still buy and sell shares in all the funds behind these strategies.
 

What happens to the Russian investments in the funds?

Our portfolio managers are working to divest Russian government bonds and Russian state-owned enterprises from the funds. However, it is currently extremely difficult to sell off the Russian investments.
 
The financial markets have been hit by Russian countermeasures to Western sanctions, such as Russia excluding international investors, which means we have not been able trade bonds or equities on the Russian market since 25 February. When the stock exchange might reopen to foreign investors is difficult to predict. We do not expect Russia to be a relevant investment market for Danske Invest in the time ahead.
 

How can I know what my investments are worth in the Danske Invest funds with Russian investments?

Putting a valuation on Russian investments is associated with great uncertainty at the moment. This is one of the reasons why the funds Danske Invest Russia and Danske Invest Eastern Europe are not being traded. We are monitoring the situation closely and use input on pricing from several different sources. However, available estimates of the value of the Russian investments indicate they have fallen drastically in recent weeks and there is a risk that a number of the Russian investments will be lost.
 

What is happening with Danske Invest Østeuropa, Danske Invest SICAV Russia and Danske Invest SICAV Eastern Europe?

It was decided at Danske Invest’s AGM on 28 April 2022 to close Danske Invest Eastern Europe. Furthermore, the board of Danske Invest SICAV has decided to close the two funds Danske Invest SICAV Russia and Danske Invest SICAV Eastern Europe.

Why are you closing the funds?

The prevailing uncertainty and our obligations under our Responsible Investment Policy mean we do not expect to be in a position to deliver the desired value creation in Eastern Europe- and Russia-focused funds and strategies going forward. Looking ahead, creating well-diversified portfolios will be difficult given the funds’ current assets and the many exclusions and sanctions targeting Russian companies. This is the case both for the Russia fund and also the Eastern Europe fund.

With both funds, consideration of our investors is the central factor for us. The time horizon for the Russian market reopening to foreign investors is very uncertain. By closing the funds, we can free up those investor assets that are bound up in liquid equities and so provide investors an opportunity to freely dispose of these as they wish.

Furthermore, in the case of Danske Invest Eastern Europe, we are seeing only limited investor interest in maintaining the strategy as a purely Eastern Europe fund without Russia. A similar fund has previously existed at Danske Invest but failed to achieve a viable level of assets. Moreover, the fund is now one of the smallest at Danske Invest.
 

When will the shares be paid out?

The liquidation process will begin after 28 April 2022. Having considered the extraordinary conditions, Danske Invest Management A/S cannot anticipate when the liquidation will be final, but the fund will remain suspended. Once the liquidation is final, the value of the shares will be determined and paid out as soon as possible. The customers do not need to do anything in this regard.

 

What about index funds that include Russian investments?

The majority of index producers, including MSCI, have dropped Russian assets from their indices. Hence, Danske Invest funds that track an index that previously contained Russian assets will have to divest these assets when possible. We do not yet know how this will actually function in practice, but we will provide further information when we know more.
 
We are monitoring events closely and will keep you up to date as the situation develops.

READ ALSO: The war in Ukraine: What Danske Bank is doing

This article is marketing material and does not constitute investment advice. Please always be aware that historical return is not an indicator of future return, which can be negative.

Always consult your professional advisors on legal, tax, financial and other matters that may be relevant to determining the appropriateness and suitability of an investment.

We recommend that you read the prospectuses before making a final investment decision. Prospectuses and information about complaint procedures are available in Danish and can be found here.