Events occurring between Russia and the Ukraine has the risk of becoming a lengthy military engagement. This engagement, combined with the economic sanctions brought forth by Western governments, is expected to cause Russia’s economy significant cumulative impacts for years to come.
Impact on CST Spark RESPs
CST’s indirect exposure to Russian companies comes through our investments in Global and Emerging Market exchange traded funds (ETFs). The sanctions have had an immediate effect on the value of investments. Our estimated maximum exposure to Russia is very small and is as follows:
- CST Bright Plan/CST Spark Education Portfolios 0.17% of assets of $6.2 million
Some index providers have indicated that Russia will be excluded from indices after specified dates. Some ETF providers have indicated that funds will continue to hold Russian securities beyond the respective index deletion date(s) until regulatory and market conditions allow for divestiture. Also, ETF providers will continue to value the securities using a variety of methodologies, however, these may not represent the actual amount realized upon eventual disposal.
What are we going to do?
At CST, our investment philosophy is built on a specific framework. We will continue to focus on our investment objectives to protect principal and earn a reasonable return for our clients over the long term. Our holdings of Russian companies will not increase and is expected to decrease as the ETF providers adjust their portfolios as outlined above.