What BlackRock did, who retains the recovery rights, and how an individual investor should assess frozen securities.
A security marked at zero can attract a patient investor for understandable reasons. The underlying business may still operate, institutions may prefer to remove an awkward position, and someone investing their own money may be able to wait longer than a fund with redemptions, reporting obligations and a fixed mandate.
Those advantages become useful only when the investor can acquire a recognised entitlement to future money. A low accounting value says little about whether a purchase is possible, what rights transfer, or how a recovery would reach a Swiss or European brokerage account.
The Russian holdings remaining inside iShares funds illustrate this distinction. Broad emerging-market ETFs continue operating with residual Russian positions, while dedicated Russia funds entered liquidation or termination. Their investment implications differ substantially.
For a new individual investor, the first task is to identify an executable purchase and the rights it conveys. The recovery valuation comes next.
What a zero valuation actually tells us
After Russia’s invasion of Ukraine, international investors faced sanctions, Russian restrictions and disrupted market infrastructure. MSCI removed Russia from its emerging-market classification at an effectively zero price at the close of 9 March 2022. This was an index decision; it could not itself sell securities trapped inside a fund. [1]
Three quantities should be kept separate: the price shown on a Russian exchange, the value a fund assigns to an inaccessible holding, and the cash that a particular foreign investor might eventually receive. They can differ dramatically.
A fund’s net asset value, or NAV, measures its assets less liabilities per share. Using an inaccessible market quotation can give a misleading impression of the money available to meet investors’ claims. Fair valuation addresses that accounting problem. It does not by itself cancel the underlying shares, settle a legal claim or establish an executable sale price.
This matters when reading a holdings file. A position with a portfolio weight rounded to 0.00% can still consist of millions of shares. Conversely, those shares may have no realisable value for the fund despite a substantial local-market quotation.
What BlackRock did in broad emerging-market ETFs
The continuing broad funds retained Russian positions while managing their wider portfolios.
The operational result is important: an index can remove a country while the fund continues recording securities it cannot readily dispose of. The fund keeps those restricted positions on its books while managing the rest of the investable portfolio.
If those assets and their economic rights remain in a continuing fund, a subsequent recovery or upward valuation would ordinarily enter that fund’s assets and affect NAV, subject to expenses and distribution rules. That is an inference from normal fund accounting, not a promise of recovery or of an immediate cash dividend. An investor who previously sold the broad ETF should not assume that a separate personal entitlement to its Russian holdings survived the sale.
The broad ETF as a way to buy overlooked Russian value
It provides indirect exposure to whatever residual rights the fund still owns, alongside the much larger investment in the rest of the portfolio. The investment decision therefore remains predominantly a decision about emerging markets.
Consider a purely illustrative fund with assets worth CHF 100 per unit. If previously unvalued rights eventually add a net CHF 2 per unit, the direct addition is 2%, before subsequent market movements. A large gain on the restricted securities can have a modest effect on the whole fund.
The potential uplift must be assessed against the fund’s current assets and units outstanding. Russia’s historical portfolio weight, or its value before the invasion, is not a reliable estimate of today’s recovery per unit. Investors must also consider disposals, distributions, costs and changes in fund size.
A long holding period makes recurring costs particularly relevant. Paying an additional 0.20 percentage point each year for ten years would consume roughly 2% of value, all else equal. That hypothetical fee difference can offset a small eventual recovery bonus. Domicile, benchmark, distribution policy, tracking and broker access should therefore drive the ETF choice.
Buying a broad emerging-market ETF primarily for its residual Russian holdings would require a credible estimate showing that this component materially changes the investment case. The holdings files alone do not supply that estimate.
What changed in the dedicated Russia funds
A diversified emerging-market fund can continue investing elsewhere. A dedicated Russia fund lost the market access needed for its central purpose.
ERUS moved into liquidation
The US iShares MSCI Russia ETF stopped new creations in March 2022 and exchange trading was halted. Its board approved liquidation in June, and the SEC subsequently allowed it to suspend redemptions while distributing remaining assets. The fund ceased functioning as a normal exchange-traded fund. [6]
Its official page, dated 21 October 2026, shows a NAV of approximately USD 0.03 and says the liquidation plan continues through 31 December 2026 unless significant market developments intervene. The management fee remains waived. That NAV is not a price at which a new investor can necessarily buy shares, and the extension date is not a repayment deadline. [7]
Recoveries have nevertheless occurred. ERUS’s annual report for the year ended August 2025 states that it sold investments previously carried at nominal values. This is evidence that an accounting write-down can be followed by proceeds. [8]
The December 2025 prospectus allows private sales of near-zero holdings when exchange disposal is unavailable, following BlackRock Fund Advisors’ recommendation and board approval. It also anticipates no trading market in fund shares. Fee waivers do not eliminate every possible transaction, tax or exceptional expense. [9]
The plan also permits eventual termination and disposal or write-off of remaining holdings under board oversight, so a long personal horizon does not guarantee that the fund will preserve every position indefinitely. [9]
CSRU preserves existing entitlements but restricts transfers
The Irish iShares MSCI Russia ADR/GDR UCITS ETF, commonly identified as CSRU, followed a different termination structure. Its June 2022 notice preserved shares on the register, with entitlement to subsequent net liquidation proceeds based on the register at 20 June 2022. The notice explicitly made those units non-transferable and non-tradeable. [10]
BlackRock’s continuing update describes the fund as in termination, with holdings retained pending possible disposal and further distributions having occurred. [11]
An existing holder can therefore have a continuing economic interest even though a prospective buyer cannot acquire the same units through an ordinary purchase. A private promise from another holder to forward future payments would be a separate contract, requiring its own legal and counterparty analysis; it should not be confused with a fund-recognised transfer.
Buying blocked securities from BlackRock as an individual
The ERUS prospectus establishes that private disposals are contemplated. It does not advertise a retail purchasing service, a minimum ticket, a quoted inventory or an accepted route for an individual buyer. [9]
The seller in such a transaction would be the relevant fund, with BlackRock acting as manager under the applicable governance arrangements. A zero carrying value does not create an obligation to sell for zero. A proposed buyer must offer terms that the fund can lawfully and operationally complete.
The economic opportunity is conceivable: a fund may prefer a certain payment today, while a buyer may accept a longer and more uncertain recovery process. Both decisions can be rational. But a real investment case requires a specified security or claim, a willing seller, valid transfer documents and institutions prepared to handle settlement and future proceeds.
The practical routes differ:
| Possible purchase | What the investor obtains | Present investment implication |
|---|---|---|
| A continuing broad emerging-market ETF | A diversified portfolio including residual Russian rights | Evaluate the whole fund; the recovery component is uncertain |
| ERUS shares | An interest in a liquidating fund | Published NAV does not establish an available market |
| CSRU units | Existing termination entitlements | The stated non-transferability prevents an ordinary new purchase |
| Restricted underlying shares or depositary receipts | The particular rights defined by the instrument and custody records | Requires a lawful, workable transaction assessed individually |
| A private promise to pass on proceeds | A contractual claim against the seller | Adds recognition, enforcement and counterparty risks |
No general retail route to acquire a specified BlackRock-held Russian lot at a specified price is established by the documents reviewed.
Swiss residence and a long horizon do not settle the access question
Rules depend on the investor, the security, the counterparties and the institutions processing the transaction. OFAC states that US persons are generally prohibited from purchasing new or existing Russian-issued debt and equity under the relevant new-investment prohibitions, while continued holding and certain divestments are permitted. Separate blocking restrictions can still apply. [12]
Switzerland’s legally applicable framework is its own Ukraine sanctions ordinance, as SECO explains. Swiss residence alone therefore does not determine whether an entire transaction is possible. A US institution, a restricted custodian or a Russian approval requirement may also affect the chain. [13]
Operational access can be narrower than an investor expects. Interactive Brokers currently states that its clients cannot open or close Moscow Exchange positions and that it does not receive the relevant MOEX pricing data. This is a concrete broker limitation, not a statement that every broker has identical policies. [14]
Before committing money, the investor needs written confirmation covering the exact instrument: acceptance into custody, registration of ownership, processing of distributions and any permissions required. A generic statement that a broker “supports Russian securities” is insufficient.
A real recovery illustrates the price of restricted access
JPMorgan’s July 2026 notice for its Rosneft depositary receipts provides a useful example outside the iShares funds. It reports a sale of underlying shares to a non-sanctioned purchaser under Russian governmental approval and a specific OFAC licence.
The sale price was 30% of the Moscow closing price on 13 March 2026. The announced final cash distribution was USD 1.780982 per receipt after deductions, while certain dividends remained in a restricted Russian account. Following the sale, outstanding receipts represented rights to liquidation proceeds rather than continued equity exposure. [15]
The notice also warns of potentially missing underlying shares and unreconciled records following forced conversions. [15]
This was not a disclosed BlackRock transaction. Its relevance is the mechanism: recovery was possible, but involved negotiated permissions, a substantial discount and cash that remained restricted.
An investor can be right that a company has economic value and still receive much less than the value implied by its local share price. Liquidation can also end participation in future appreciation. Waiting for normalisation may no longer be an available strategy after the underlying shares have been sold.
How this differs from buying Lehman claims
York Capital’s Lehman investment involved participations in admitted claims against the UK estate, with English courts determining disputed interest rights. That gave investors a defined insolvency process through which to pursue payment, although the legal arguments and timetable remained uncertain. [16]
Frozen Russian equities present a different valuation problem. A business can retain economic value while a foreign holder cannot transfer the security or collect its proceeds. The route to recovery depends on the particular custody chain, restrictions and disposal arrangements described above. Political normalisation alone does not specify who receives what money.
The common investment discipline is to establish the transferable entitlement and value its future net payments. The Lehman case study accompanying this article examines how a professional buyer did that, and why purchasing remaining claims connected with structured notes differs from owning the securities described in the original product’s marketing.
How to value the opportunity if a purchase becomes possible
Start with an all-in acquisition cost and a range of net cash recoveries. Deduct expected custody, transaction, legal and tax costs where applicable. Model currency conversion and the possibility of no recovery. Use only distributions that would belong to the buyer after settlement.
The time dimension changes the result considerably:
| Hypothetical outcome | Annualised return |
|---|---|
| Double the all-in investment after five years | 14.87% |
| Double after ten years | 7.18% |
| Double after fifteen years | 4.73% |
| Double after twenty years | 3.53% |
These calculations assume a single terminal payment, no interim income and a recovery already net of subsequent costs. They are illustrations, not forecasts for Russian securities.
A doubling after fifteen years may be less attractive than its headline suggests, particularly when the alternative is a liquid, diversified investment. The attractive outcome may also never occur. A recovery model should include a permanent-loss scenario and should not assign precise probabilities merely to make a spreadsheet produce a favourable answer.
Distinguish two kinds of evidence. A political development can improve the general outlook. An instrument-specific development—an approved transfer, a recognised claim, a licensed sale or a confirmed cash distribution—can alter the actual route to repayment. The latter is usually more useful for pricing the investment.
Where personal patience helps and where it stops
An individual using capital they can afford to leave untouched may be able to hold through years without a market quotation. Avoiding borrowed money and an obligation to meet other investors’ withdrawals can be an advantage.
That advantage must survive the economics of a small position. Specialist documentation and custody work can be expensive relative to a modest investment. A position large enough to spread those costs may create excessive concentration in one political and legal outcome.
Several Russian holdings can also depend on the same settlement restrictions, permissions and currency controls. Owning different companies does not necessarily diversify the dominant risk.
A sensible allocation is therefore determined by the amount that can be permanently lost and the amount that can remain unavailable through adverse personal circumstances. It should not depend solely on an optimistic recovery estimate.
For an existing holder, the immediate practical task is to preserve the instrument identifier, quantity, relevant record-date statements and distribution history, and to understand how the custodian will process future corporate actions. A displayed zero should not be treated as proof that every entitlement has ended.
For a new buyer, research should first establish whether a documented purchase route exists. A long time horizon can accommodate uncertain timing; it cannot supply missing ownership rights or compel a payment.
Developments that would strengthen the investment case
The most useful changes would be a legally accepted transfer to the proposed buyer, a custodian willing to service the asset, a clearly documented entitlement to remaining distributions, and a price supported by conservative net-recovery scenarios.
Evidence of actual permitted sales is more informative than a theoretical Moscow valuation. Clear treatment of blocked dividends is more useful than assuming they accumulate for the buyer. A defined liquidation distribution can be easier to assess than an open-ended expectation of market reopening, although it may offer less upside.
Each development must be assessed for the particular instrument. A licence or transaction involving one issuer and one purchaser does not automatically create access for everyone else.
Guidefinances view
Patient investing in distressed securities can be rational when the investor understands a transferable claim, pays a price that compensates for uncertainty and can absorb both delay and permanent loss.
For the Russian assets inside iShares funds, the current distinction is practical. Continuing emerging-market ETFs can be assessed as diversified investments with a contingent recovery component. Dedicated Russia funds have liquidation and transfer restrictions that prevent a displayed near-zero NAV from becoming a straightforward buying opportunity. A private acquisition of underlying assets would require a separate, verified transaction.
The strongest advantage available to an individual is disciplined selectivity. There is no need to commit capital before the ownership, payment route and price can be evaluated together.
For the broader portfolio framework, see the Guidefinances investment guide and financial toolbox.
Selected sources
- MSCI announcement on Russia reclassification, 2 March 2022.
- EEM official holdings, snapshot 20 October 2026.
- IEMG official holdings, snapshot 21 October 2026.
- EIMI official holdings, snapshot 20 October 2026.
- IEEM official holdings, snapshot 20 October 2026.
- ERUS SEC prospectus supplement, 3 August 2022.
- ERUS product and liquidation information, reviewed 22 October 2026.
- ERUS annual shareholder report, year ended 31 August 2025.
- ERUS prospectus, 30 December 2025.
- iShares VII CSRU supplemental shareholder notice, 16 June 2022.
- BlackRock update on Russia and the affected funds.
- OFAC FAQ 1054 on Russian debt and equity purchases.
- SECO measures concerning Ukraine and Russia.
- Interactive Brokers market-access notice.
- JPMorgan Rosneft depositary-receipt final announcement, 21 July 2026.
- Court of Appeal judgment on LBIE interest rights, 24 October 2017.
Holdings downloads are updated by the issuer; the figures above refer to the stated snapshots. This article explains investment mechanics and risks and does not identify a currently executable private purchase. Transaction eligibility, sanctions and custody arrangements require a fresh check for the specific instrument and investor.
