“The new oil ETFs’ structure is unique and allows investors to differentiate them from existing products,” Keith Cunningham, Chief Marketing Officer at AccuShares, told ETF Trends on a call.
Specifically, Cunningham pointed to three points: Firstly, OILU and OILD have the lowest all-in fee structure by far among oil ETFs. Secondly, due to its indexing methodology, ETF investors will not have to fill out a K-1 form come tax day. Lastly, OILD may offer a more pure inverse option for people to go short since it is not subject to the daily rebalancing that other bearish funds undergo.
“Traders may enjoy a more institutional investment experience,” Cunningham added.
The two new ETFs will hold only cash, short-dated U.S. Treasuries or collateralized U.S. Treasury repurchases. The ETFs will not invest in commodities, futures, swaps or other assets that may track the underlying oil index.
Consequently, due to its portfolio make up, OILU and OILD come with a much cheaper 0.29% expense ratio, compared to the average expense ratio of 0.81% for all commodity-related ETPs and more expensive futures-backed ETFs.
Related: A Very Bullish Call for Oil ETFs
The two oil ETFs are also seen as two faces to coin since the funds are part of a multi-share class product. Cunningham describes the up-down share class as a self-hedging ecosystem where one share goes up and the other goes down.
“The benefits to the Up Share Class is equal to the adverse impact to the Down Share Class and vice versa,” according to AccuShares. “Investors must choose either the Up or the Down Shares based on their individual opinion of the future direction of the Underlying Index.”
For more information on new fund products, visit our new ETFs category.