Just because something is cheap does not mean it is a good bargain. Such is life for Russian equities and the relevant U.S.-listed ETFs. Amid slumping energy shares, the “R” in the BRIC acronym saw its benchmark Micex Index slip to a three-month low on Tuesday. The slide comes just a couple of weeks after some analysts and traders started calling attention to attractive valuations among Russian stocks.

In late October, the Market Vectors Russia ETF (NYSE: RSX [FREE Stock Trend Analysis]), the oldest and largest Russia ETF, was spotted trading at its widest discount to the iShares MSCI Emerging Markets Index Fund (NYSE: EEM) in nearly three months.

Since October 29, RSX has slipped almost 5.1 percent as prices have continued tumbling. The Russian government earns about half its revenue from the sale of crude and natural gas, according to Bloomberg.

RSX allocated 41.6 percent of its weight to energy stocks as of October 31, according to Market Vectors data. That would normally be viewed as an excessive weight to just one sector for any ETF, but the iShares MSCI Russia Capped Index Fund (NYSE: ERUS) allocates almost 56 of its weight to energy names. Continue reading →