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05/11/2009 An ETF issuer announces the first enhanced oil exposure in an ETP

UK_BUCKINGHAM PALACE

An ETF issuer, is pleased to announce a significant innovation aimed at improving access to …..

oil market exposure with reduced counterparty risk and tracking error.

Source announced the launch of a ground-breaking T-ETC (US Treasury-Bill secured Exchange Traded Commodity) linked to the S&P GSCI Crude Oil Enhanced index. During 2009, the performance of conventional front-month rolling oil products has varied dramatically from the spot price of oil (e.g. United States Oil is up 10.36% from 2 January 2009 to 30 October 2009 while spot NYMEX WTI crude is up 66.16%). The new Source S&P GSCI Crude Oil Enhanced T-ETC (symbol: SEWTI GR) is designed to provide a significantly higher level of correlation to the price performance of spot WTI crude oil. The S&P GSCI Crude Oil Enhanced index adjusts its exposure to the futures curve monthly, dynamically moving between the front month and 6 month futures contract depending upon the steepness of the curve. It also has an enhanced rolling schedule designed to avoid the concentration of futures hedging that occurs between the 5th and 9th business day of each month. This is the first enhanced oil product to be offered in the European ETP market.

Source has delivered similar innovation in equity sector exposure. Source collaborated with STOXX to launch a range of Optimised Sector ETFs at the end of July 2009 which have raised over EUR900MM (US$ 1.4BN) in three months, taking on a 15% market share and offering unprecedented liquidity. Source’s Optimised Sector ETFs have daily turnover of 5-10% of assets under management with peaks of 20%. The baskets of stocks underlying Source’s Optimised Sector ETFs are inherently more liquid due to the liquidity screening process applied. In addition, Source’s partners (BofA Merrill Lynch, Goldman Sachs, Morgan Stanley and Nomura) maintain an active lending market in Source’s ETFs. Borrowing and shorting ETFs is common practice in the US but very rare in Europe.

As a result of its focus on improving ETFs as tradable and transparent investments, Source currently has over US$2.8BN in assets amassed since its launch in April 2009. It is the fastest growing new entrant to the Exchange Traded Products market since the market’s inception in 2000. Source is also the only ETC provider offering products hedged with multiple derivative providers and backed by US Treasury Bills and cash.

Source UK Services Limited is regulated by the UK Financial Services Authority.

Source: ETFWorld – Source

 

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