As the end of the year approaches, people are beginning to think about the tax consequences of their investment holdings.
With the oil trade gaining momentum after hitting a low earlier this year, many have looked to exchange traded funds as a way to play market moves, and one recently launched oil ETF stands out for investors seeking to simplify tax headaches.
The relatively new ProShares K-1 Free Crude Oil Strategy ETF (BATS: OILK) is an actively managed fund that provides exposure to the West Texas Intermediate crude oil futures market.
However, unlike other oil futures-backed ETFs, OILK 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 the troublesome K-1 form.
“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. “OILK is the only U.S. ETF that lets investors get crude oil exposure but skip the K-1 tax form.”[related_stories]
While it may be fun to play these types of market moves in commodities, investors will have to deal with the slightly different taxes associated with the investments.