How to divest from Russia?

blue and yellow ukrainian flag divest from russia

Obviously Vladimir Putin’s aggression disgusts you. You want to stand up for Ukraine and for your beliefs. As countries ratchet up damaging economic sanctions, you wonder how to divest from Russia. This Q&A with Mitchell Nelson, Senior Wealth Manager at Rockdale Financial Services, walks you through the basics.

Q+A with Mitchell Nelson, Senior Wealth Manager, Rockdale Financial Services
how to divest from Russia people in the street protesting against war
ESG Hive: How do I find out if I am already invested in Russia?

 

Mitchell Nelson: Most simply, check your personal portfolio for Russian companies, bonds, and currency. Sometimes, American (and European) companies create subsidiaries that partner with Russian companies to sell in the USA, EU and Russia. Unfortunately, this information is complicated to find. You would have to look up individual US company filings on the U.S. Securities and Exchange Commission – EDGAR website to find out more about their subsidiaries and partnerships.

 

Often, when US investors have holdings in Russia, it is through funds called emerging markets or developing markets. These titles indicate that the positions may have some Russian exposure. You can check the Annual or Semi-Annual reports of your investment funds to be sure.

 

Obviously, you can tell by now that it is easier to ask your financial advisor. If your advisor doesn’t know, they can run a report for you on professional software. These reports describe how much exposure to Russia you have in your portfolio. If you don’t have an advisor, contact one to run an analysis of your portfolio.

 

If you have no personal investments you may still have Russia exposure in your 401(k), 403(b), 457 or your pension plan. The administrators of those plans can tell you.

 

ESG Hive: What are the easiest ways to divest from Russia?

 

Mitchell Nelson: The easiest way to make your point is to not buy Russian products. The biggest US consumer imports are vodka and caviar.

 

You can also express your support for U.S. companies and the Federal Government to embargo Russian energy imports. Putin is reliant on oil and natural gas exports to fund his hostilities.

 

If you find out that you are investing in a Russian company via a mutual fund or a US company that does business with Russian companies, by all means sell those investments. If you have a financial advisor, simply instruct them to sell:

 

  • all investments in Russian companies and subsidiaries;
  • all holdings in the Russian government, such as bonds and currency.

 

Finally, you can consider how you feel about your holdings in crypto currencies. Sanctioned individuals and entities use crypto to hide their wealth because it is not regulated.

 

ESG Hive: Are US-based financial institutions divesting from Russia?

 

Mitchell Nelson: US financial institutions and advisors must comply with US sanctions. The US Treasury publishes a list of sanctioned Russian entities and individuals from which all US institutions and individuals must divest. Just search for Russia and you will find over 700 sanctioned entities and individuals and rising.

 

New York State Department of Financial Services has issued guidelines about enforcing these sanctions and sheltering US investors from cyber attacks. Surely other US States are doing the same.

 

As to whether US institutions are divesting voluntarily, the answer is yes, no and maybe. Some financial institutions sold off their Russian exposure when Putin annexed Crimea. Despite the fact that investing in Russia has risk, some US financial institutions were still willing to invest because of the potential for investment gains. They may now divest from Russia, if there is mounting governmental or public pressure to do so.

 

Presently, several Russian banks can no longer use the international SWIFT payment system. This will cripple Russian trade. Consequently, this can cause US financial institutions to divest more of their holdings assuming a Russian stock market and economic collapse. For example, JPMorgan has removed Russian bonds from all its Fixed-Income Indexes and removed Russia and Belarus from all its ESG Indexes.

 

Outside the USA, Norway’s Sovereign Wealth Fund announced that it would divest from Russia on more grounds.

 

ESG Hive: What about American and European companies with major operations in Russia, are they divesting?

 

Mitchell Nelson: Yes, British oil company BP was one of the first when it announced it will exit its 19.75% shareholding in Russian oil company Rosneft. We are now seeing a corporate stampede out of Russia, including household names such as Apple, Microsoft, Mastercard and Visa. Russia has been an important market to some of the EU and USA’s biggest companies and so this is a significant stance for them to take.

 

ESG Hive: Does divesting from Russia hurt Putin?

 

Mitchell Nelson: Interestingly, some finance analysts believe that Putin is the richest man in the world. However, it is easier for government sanctions to target Putin and other elites directly because governments have intelligence about their assets. Dictators and oligarchs hide their assets all around the world.

 

Nevertheless, when individuals divest from Russia, it sends a message to Wall Street that everyday US investors expect market leaders to reconsider their strategies in Russia.

 

blue and yellow ukrainian flag divest from russia
Photo by Mathias P.R. Reding on Pexels.com
Protestors call for an end to Russia’s hostilities.

 

Mitchell Nelson is a Registered Representative offering securities and advisory services through Cetera Advisors LLC, member FINRA/SIPC, a broker/dealer and a Registered Investment Advisor. Cetera is under separate ownership from any other named entity. ESG Hive is NOT affiliated with any of Mitchell Nelson, Cetera Advisors LLC and Rockdale Financial Services Inc. We never endorse products, services or investment advice. Find out more in our Disclaimers.

 

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Tags :
Conflict,DEI,Divestment,Environment,Governance,Human Rights,Oil and gas,Shareholder activism,Supply chains
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