The WTI crude oil futures market is currently stuck in a state of contango, with November 2016 contracts hovering around $45.64 per barrel, compared to October 2017 contracts trading at $50.06 per barrel, according to the CME Group.
OILK will track WTI crude oil futures with the three nearest expiration dates, or the front, second and third month contracts, which may help diminish the negative effects of contango.
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Additionally, the new oil ETF will gain exposure to WTI crude oil futures through its ProShares Cayman Crude Oil Strategy Portfolio, a wholly-owned subsidiary of the fund. Since OILK is not structured as a commodities partnership that directly utilizes futures contracts, the new active ETF will not require investors to fill out a K-1 – most commodity futures-based ETFs require K-1s. Instead, investors would only need to fill out tax reporting information on 1099 forms.
“Many investors want to invest in crude oil with the convenience of an ETF, but all other crude oil ETFs involve complicated tax reporting,” Michael L. Sapir, co-founder and CEO of ProShares Advisors, said in a press release. “OILK is the only U.S. ETF that lets investors get crude oil exposure but skip the K-1 tax form.”
For more information on new fund products, visit our new ETFs category.