Mutual fund manager Vanguard suspends purchases of Russian securities

By Ross Kerber and Davide Barbuscia

BOSTON (Reuters) -Vanguard Group has suspended purchases of Russian securities from its actively managed funds, the top mutual fund manager said on Monday.

Pennsylvania-based Vanguard said the suspension applies “across our internally and externally managed active funds.” It said the company is also working to exit positions across its index funds.

The statement on the Vanguard website took a more aggressive line than the company did on Friday when it said it would not restrict managers’ investment decisions and on Monday morning in a statement sent by a Vanguard spokesperson that it was in talks with external managers.

A Vanguard representative did not immediately respond to a request for comment on the change.

Some rival fund companies had already taken similar steps as deepening sanctions and public pressure isolate Russia’s economy from Western investment and trading partners.

On Thursday, BlackRock Inc said it had suspended the purchase of all Russian securities in its active and index funds.

Franklin Templeton said on Friday it would make no new investments in Russia or Belarus in sovereign or corporate debt, or public or private equity, and may take further steps.

Russia has called its actions in Ukraine a “special operation.”

Passive index funds account for most of Vanguard’s roughly $8.1 trillion under management, but $1.7 trillion of that is in actively managed funds, with $767 billion run by external managers such as Wellington Management of Boston and Baillie Gifford of Scotland.

Total exposure to Russia accounts for less than 0.01% of client assets, Vanguard said. Its statement said it moved quickly to carry out sanctions against Russian banks and others, “and to make needed adjustments prompted by market closures and index provider changes.”

Major index providers, including MSCI and FTSE Russell, also have been removing Russian equities and debt.

Morningstar Inc on Monday said it would take steps to remove Russian equities from certain Morningstar indexes, and make similar change removing certain Russian debt from fixed-income indexes.

(Reporting by Ross Kerber and by Davide Barbuscia; Editing by Jonathan Oatis, Will Dunham and David Gregorio)