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ETF Securities sees increased interest in Crude Oil and
Short & Leveraged ETCs
20/11/08
- Flows into Oil ETCs exceed $40mn over the past two weeks
indicating increasingly bullish view on the oil price outlook
- Strong flows into Short & Leveraged ETCs highlight widely
diverging views on commodity price outlook
- Investors welcome improved ETCs with 100% collateralisation of
the 120 ETCs tracking DJ-AIG Commodity indices
ETF Securities Limited (ETFS), the global pioneer of exchange traded commodities
(ETCs), and provider of Exchange Traded Funds (ETFs) has seen strong inflows
into long oil ETCs. This has corresponded with falling interest in ETFS Short Crude
Oil (SOIL). The combined trend indicates that investors are becoming
increasingly bullish on the oil price outlook. It also reflects that ETCs are
becoming an increasingly important way for investors to gain oil exposure. The
two most popular long Oil ETCs are ETFS Brent Oil (OILB) and ETFS Crude Oil
(CRUD).
ETF Securities has also seen increasing net flows into its Short and Leveraged
ETCs reflecting investors' diverging views on the short term outlook for
commodities. Additionally, ETCs are increasingly being used for hedging
commodity price risk, pair trades and building positions with less capital (in the
case of the leveraged ETCs).
Flows into Short & Leveraged ETCs (ex SOIL) are up 10% in the past month, with
flows into Short ETCs (ex SOIL) up nearly 30%. Short ETCs have experienced
three consecutive weeks of inflows as investors have continued to build short
positions in more cyclically oriented commodities such as energy and industrial
metals. Total assets under management (AUM) in short ETCs now stand at
$123mn.
The top Leveraged and Short ETCs last week included ETFS Leveraged Zinc
(LZIC) up 20%, ETFS Leveraged Wheat (LWEA) up 12%, while ETFS Short
Gasoline (SGAS) was up 8% and ETFS Short Heating Oil (SWEA) was up 7%.
Short ETCs allow investors to earn a positive return even when the index is
falling. Short ETCs earn minus one times (-1x) the daily change in the index
(before fees and interest). For example, if the underlying index falls by 2% in a
day, a Short ETC will increase by 2% and vice versa.
Leveraged ETCs allow investors to earn a positive return when the index is rising
with 50% less capital. Leveraged ETCs earn two times (+2x) the daily change in
the index (before fees and interest). For example, if the underlying index rises by
2% in a day, a Leveraged ETC will increase by 4% and vice versa.
ETF Securities recently enhanced its ETC platform through the 100%
collateralisation of the 120 ETCs that track DJ-AIG commodity indices. This
collateralisation means that the counterparty risk has largely been removed. ETF
Securities also provides investors with 6 physically backed precious metal ETCs
that are backed by uniquely identifiable metal bars which carry no bank credit
risk. Investors feedback has been very positive, both on the new structure, and
ETF Securities efforts to reduce risk for investors. The general feeling is that
these products are leading the market globally for exchange traded products and
the trading and inflows reflect this.
ETF Securities' ETC & ETF platform is both comprehensive and unique, which
provides a highly efficient and liquid method of accessing the global commodity
markets.
Commenting on the increased interest in Crude Oil and Short &
Leveraged ETCs, Hector McNeil, Head of Sales and Marketing, said:
"We are seeing strong flows into our platform of ETCs that provide long oil
exposure to investors. This is on contrast to earlier this year when ETFS Short
Crude Oil (SOIL) was trading more than any other ETC or ETF when oil prices
reached record levels of $145 per barrel. Given the rapid fall in the oil price,
investors are now starting to look at oil positively again. ETFS Brent Oil (OILB)
and ETFS Crude Oil (CRUD) have recently been the two most traded long oil
ETCs.
"The depth of the ETC offering including long, leveraged and short exposure is
proving very useful for investors in these turbulent times. We are also seeing
renewed demand from investors who appreciate the added security provided by
the 100% collateralisation of the 120 ETCs that track the DJ-AIG commodity
indices."
For further information, please contact:
ETF Securities continues its series of events for finance professionals:
Date: Wednesday 26th November 2008
Time: 5.30pm - 7.30pm
Venue: Chartered Accountants’ Hall, One Moorgate Place, EC2R 6EA
5:30pm – 5:40pm: Registration and refreshments
5.40pm – 6.00pm: Introducing the 13 new Equity ETFs on the London
Stock Exchange
- Introduction to ETF Securities
- Establishing the new platform of 13 Equity ETFs
- Fund structure & pricing
- Trading and liquidity
- Conclusions and Q&A session
William Rhind
Head of Sales for UK & Ireland
ETF Securities Ltd
6.05pm – 6.40pm: New ETF Platform: Investment Characteristics & Key
Fundamentals With Special Focus on Alternative Energy, Nuclear Power
and Global Water
- Key Themes
- Investment Characteristics of the New ETFs
- Fundamental Focus:
- Alternative Energy
- Nuclear Power
- Global Water
- Conclusions and Q&A session
Nicholas Brooks
Head of Research and Investment Strategy
ETF Securities Ltd
6.45pm – 7.30pm: Cocktail reception
Click here to register your place today.
For more information on the event above and ETF Securities forward
schedule of conference calls visit:
www.etfsecurities.com/en/events/etfs_events_conferences.asp
Notes to Editors:
ETF Securities Ltd is an issuer of Exchange Traded Commodities (ETCs) and
Exchange Traded Funds (ETFs). ETF Securities is independently owned is the
European market leader in ETCs. The management of ETF Securities pioneered
the development ETCs, with the world's first listing of an ETC, Gold Bullion
Securities in Australia and London in 2003 and then the world's first entire ETC
platform which was listed on the London Stock Exchange in September 2006. ETF
Securities has most recently launched the largest platform of thematic sector
ETFs in Europe providing exposure to European firsts such as Coal, Steel,
Shipping and Nuclear Power.
To learn more about ETF Securities go to: www.etfsecurities.com
This press release does not constitute or form part of any offer or invitation to sell or issue, or any
solicitation of any offer to purchase or subscribe for, any securities (together the "Securities") of ETFS
Commodity Securities Limited, ETFS Metal Securities Limited or ETFS Oil Securities Limited or any shares
(the "Shares") of ETFS Fund Company public limited company (the "Fund") or any other shares or securities,
nor shall it or any part of it nor the fact of its distribution form part of or be relied on in connection with any
contract or investment decision relating thereto. Any offer, invitation or solicitation shall be made solely by
means of the relevant prospectus (plus any supplements thereto) in the case of the Securities or the
prospectus together with the relevant sub-fund supplement in the case of the Shares (in each case the
"Prospectus") and recipients of this advertisement who are considering a purchase of Securities or Shares
following distribution of the Prospectus are reminded that any such purchase should be made solely on the
basis of the information contained in such Prospectus. This advertisement does not constitute any
recommendation regarding the Securities or the Shares.
The communication of this press release is not being made by, and this press release has not been approved
by, an authorised person for the purposes of section 21 of the Financial Services and Markets Act 2000 (the
"FSMA"). Accordingly this press release is not being distributed to, and must not be passed on to, the general
public in the United Kingdom. The communication of this press release or any other document issued in
connection with the offer and sale of the Shares or Securities is only being made to and directed at those
persons in the United Kingdom falling within the definition of Investment Professionals (as defined in Article
19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"), or high
net worth entities, and other persons to whom it may otherwise lawfully be communicated, falling within
Article 49(1) of the Order or any person to whom it may otherwise lawfully be made (all such persons
together being referred to as "relevant persons"). The communication of this press release (or any other
document issued in connection with the offer and sale of the Shares or Securities) must not be acted upon or
relied upon by persons who are not relevant persons. The Fund is a collective investment scheme for the
purposes of the FSMA and is a recognised scheme for the purposes of the FSMA. Persons distributing this
press release must satisfy themselves that it is lawful to do so. All applicable provisions of the FSMA must
be complied with in respect of anything done in relation to the Shares or Securities in, from or otherwise
involving the United Kingdom.
This is not an offer of securities for sale in the United States. The Shares and Securities have not been and
will not be registered under the US Securities Act or any other applicable law of the United States. The
Shares and Securities are being offered and sold only outside the United States to non-US persons in reliance
on the exemption from registration provided by Regulation S of the US Securities Act. None of ETFS
Commodity Securities Limited, ETFS Metal Securities Limited, ETFS Oil Securities Limited and ETFS Fund
Company public limited company (each an "Issuer") has been or intends to become registered as an
investment company under the United States Investment Company Act of 1940 (as amended) (the
"Investment Company Act") and related rules. Neither the Shares nor the Securities or any beneficial interest
therein may be reoffered, resold, pledged or otherwise transferred in the United States or to US persons. If
an Issuer determines that any holder of Shares is a US Person or any holder of Securities is a Prohibited US
Person (being a US Person who is not a "qualified purchaser" as defined in the Investment Company Act),
the Issuer may redeem the Shares or Securities (as the case may be) held by that Security Holder in
accordance with the provisions described in the Prospectus. Neither the Shares nor the Securities may be
purchased with plan assets of any "employee benefit plan" within the meaning of section 3(3) of the United
States Employee Retirement Income Security Act of 1974, as amended ("ERISA"), any "plan" described in
section 4975(e)(1) of the United States Internal Revenue Code of 1986, as amended (the "Code") or any
entity whose underlying assets include "plan assets" of any of the foregoing by reason of an employee
benefit plan's or other plan's investment in such entity, which employee benefit plan, plan or entity is subject
to Title I of ERISA or section 4975 of the Code or any United States Federal, state, or local law or non-United
States law that is substantially similar to the prohibited transaction provisions of section 406 of ERISA or
section 4975 of the Code (any such employee benefit plan, plan or entity, a "Prohibited Benefit Plan
Investor"). If the Issuer determines that any Security Holder is a Prohibited Benefit Plan Investor, the Issuer
may redeem the Securities or Shares held by that person in accordance with the provisions described in the
relevant Prospectus.
"Dow Jones," "AIG®" "Dow Jones-AIG Commodity IndexSM," "DJ-AIGCISM", "Dow Jones-AIG Commodity 3-
Month Forward Index" are service marks of Dow Jones & Company, Inc. and American International Group,
Inc. ("American International Group"), as the case may be, and are licensed for use for certain purposes by
ETF Securities Ltd. ETCs based on the DJ-AIGCISM or related sub-indices (including single commodity subindices)
or 3-Month Forward Indexes are not sponsored, endorsed, sold or promoted by Dow Jones, AIG
Financial Products Corp. ("AIG-FP"), American International Group, or any of their respective subsidiaries or
affiliates, and none of Dow Jones, AIG-FP, American International Group, or any of their respective
subsidiaries or affiliates, makes any representation regarding the advisability of investing in such product(s).
ETF Securities Limited, ETFS Commodity Securities Limited, ETFS Metal Securities Limited and ETFS Oil
Securities Limited are each regulated by the Jersey Financial Services Commission
To obtain a copy of the prospectus please visit the website at
www.etfsecurities.com
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