On this episode of ETF Prime, host Nate Geraci speaks with a trio of individuals discussing several different ETF-related topics. His guests include VettaFi’s Stacey Morris who discussed the indexes behind Texas Capital Texas Oil Index ETF (OILT) and the Alerian MLP Index ETN (AMJB). Geraci also spoke with BlackRock’s Jay Jacobs who highlighted the iShares Bitcoin Trust (IBIT), and more. To close this week’s podcast, Geraci brought on GMO’s Tom Hancock to break down the GMO U.S. Quality ETF (QLTY).
The Index Behind OILT
To open this week’s podcast Geraci brought on VettaFi’s, Head of Energy Research, Stacey Morris, to discuss the indexes underlying the OILT ETF and the AMJB ETN. Geraci highlighted that when Morris comes onto the show the duo will typically cover the energy industry at large. However, with both products recently released he is excited to look at the sector more in depth. The duo first dives into covering the index behind the OILT ETF. Geraci mentioned that the fund was released in December, and it tracks the Alerian Texas Weighted Oil and Gas Index. He then asked Morris to give a breakdown of this index.
“To be eligible for the index, you have to produce oil or gas in Texas. The index is weighted based on the economic value of each company’s oil and gas production in Texas,” Morris said.
Morris also highlighted that there is a 10% cap for individual constituents within the index. She mentioned that there are currently 31 constituents held within it, and it is rebalanced quarterly and reconstituted annually in March.
The duo also explored how this index compared to SPDR S&P Oil & Gas Exploration & Production ETF (XOP) and Energy Select Sector SPDR Fund (XLE). Additionally, the pair continued to go in-depth on this index, Texas oil companies, and the oil industry at large.
The Release of the AMJB ETN and the Index Behind It
The conversation slightly shifted gears when the duo discussed the JP Morgan launch of the Alerian MLP Index ETN (AMJB). Geraci first highlighted how in the past Morris has heavily discussed the upside of investing in MLPs in the energy sector. He then asked Morris to share some of her insights on the index behind AMJB, and how it supports her past takes.
“The underlying index for AMJB is our Alerian MLP Index, ticker A-M-Z. It’s really the leading benchmark for MLPs, and it was the first real-time MLP index,” Morris said.
Morris highlighted how the index has been around for quite some time with it originating in 2006. She also mentions how the index is primarily focused on energy infrastructure companies and MLPs. Morris then shared that the index is weighted by a float-adjusted market cap with a 10% cap. She then dove into the performance of MLPs in the last few years to provide investors with more insight into them.
The iShares Bitcoin Trust (IBIT)
Geraci then brought on BlackRock’s U.S. Head of Thematic and Active Equity ETFs, Jay Jacobs, to discuss a myriad of different subjects, including the recent release of the IBIT ETF. The pair began their discussion by getting Jacob’s take on what it was like to go viral on the X platform with his ad for IBIT. Jacobs shared that it was a surreal moment for him, and his family.
He then continued by saying, “I think it really represents the pent-up demand for the Bitcoin ETF. You know, this is something that people have been waiting for, for years.”
Geraci then shared that IBIT is close to $2 billion in assets in a little under three weeks. Jacobs mentioned that the response from investors has been tremendous, and again contributed the pent-up demand for the products to its success thus far. Ultimately, Jacobs feels that many investors were looking for access to Bitcoin, and the convenience of getting exposure through an ETF is what has drawn so many into it. However, he feels that the longer opportunity for the fund is to help investors become more comfortable with crypto overall.
Furthermore, the pair continued to discuss how BlackRock suggests investors should look at Bitcoin, and then the duo explored BlackRock’s 2024 thematic outlook.
The GMO U.S. Quality ETF (QLTY)
To close this week’s podcast Geraci brought on GMO’s Head of Focus Equity, Tom Hancock to discuss the QLTY ETF. Geraci also highlights how Hancock is the main portfolio manager of this fund. He also mentioned that GMO joined the ETF space in November of last year when it released this fund. Geraci then asks Hancock to provide some color as to why GMO decided to jump into the ETF space.
“It is something that we’ve been thinking about for a while, and it just felt like the right time to us,” Hancock said.
Hancock highlighted that the majority of GMO’s customer base are institutional investors. He mentioned that the tax advantages of ETFs are something that has become extremely important to these clients and all of their clients in general. Hancock also shared that in recent years active fundamental strategies have become relevant in the ETF market which also contributed to GMO wanting to become a part of this space. The duo closed their conversation by discussing the ETF itself, the companies it holds, and more.
Listen to the entire episode of ETF Prime Featuring Stacey Morris, Jay Jacobs, and Tom Hancock:
Vettafi.com is owned by VettaFi LLC (“VettaFi”). VettaFi is the index provider for OILT, for which it receives an index licensing fee. However, AMJB and OILT are not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of OILT and AMJB.
For more ETF Prime podcast episodes, visit our ETF Prime channel.