Even as the price of oil dipped below $100 per barrel yesterday,
IndexIQ [see profile] unveiled a new
offering to tap into small cap firms in the oil business.
The new fund, the IQ Global Oil Small Cap ETF, carries an expense
ratio of 75 basis points. Julie Abbett, head of portfolio
management and senior vice president at the Rye Brook, New York-based
firm, PMs the new, NYSE-Arca-listed ETF (IOIL). ALPS handles
distribution.
IndexIQ claims that new ETF is the first global small-cap ETF focused
on the oil business. It tracks the IQ Global Oil Small Cap Index,
which is both float-adjusted and market capitalization-weighted.
"Our two most recent launches, IOIL and CROP [an agricultural small cap
ETF IndexIQ unveiled a month ago], reflect our continued belief that
investors can find significant opportunities in the demand that currently
is permeating the commodities space," stated Adam Patti, CEO of
IndexIQ. "And we strongly believe that small capitalization companies
offer the most effective avenue for translating that demand into
significant growth."
Company Press Release
RYE BROOK, New York, (May 5, 2011) – IndexIQ, a leading developer of
index-based liquid alternative investment solutions, is introducing the IQ
Global Oil Small Cap ETF (NYSE Arca: IOIL), it was announced today.
IOIL is the first global small-cap Exchange-Traded Fund (ETF), designed to
provide pure play exposure to companies that are primarily engaged in the
oil industry. This includes firms involved in exploration and production
(E&P); refining and marketing; and equipment, services and drilling. It
seeks to track, before fees and expenses, the performance of the IQ Global
Oil Small Cap Index (Bloomberg Index Ticker IQSMOIL).
The price of oil has risen 23 percent this year and gasoline has climbed
to a 33-month high, spurred by a number of factors including the still
unfolding unrest that has swept across the Middle East. This dramatic
price appreciation has driven the price of crude oil over $100 a barrel,
which is having a significant impact on industries and consumers who are
trying to keep pace with rising prices at the pump.
“Rising oil prices have wide-ranging repercussions, but it also offers
opportunities for investors. Investors interested in oil company exposure
historically have been limited in their choices to funds that contain
exposure to both the oil and natural gas industries, or to commodities
that offer very different return profiles,” said Adam Patti, chief
executive officer with IndexIQ. “That approach is fine if one is
looking for a way to add broad energy exposure, but not if a specific,
concentrated oil industry play is what’s being called for.”
Patti added “IOIL is focused on the global oil sector because non-US
companies increasingly control the industry, drive the majority of the
industry revenue, and control the vast majority of proven reserves. U.S.-
based oil companies increasingly are at a disadvantage when competing
against foreign entities in closed economies. Additionally, we believe the
small-cap segment of this and many markets holds the greatest potential
for investors since these companies typically are better positioned for
growth than their large cap competitors.”
Patti went on to note that the IQ Global Oil Small Cap Index provides
strikingly accurate tracking to spot oil prices. Additionally, IOIL
investors will never receive a K-1, an important consideration at tax
time.
The IQ Global Oil Small Cap Index is float-adjusted and market
capitalization-weighted. To be included in the index, companies must have
a minimum average market capitalization of $150 million for the prior 90-
day period. Stocks are required to have a minimum average daily trading
volume of at least $1 million for the prior 90 days, and a minimum monthly
volume of 250,000 shares for the prior six months. The Index’s components
and their respective weights are rebalanced quarterly.
As of April 11, 2011, the index had sector allocations in refining &
marketing (40.46 percent), exploration & production (36.90 percent) and
equipment & services (22.64 percent); while the top three countries were
the United States (45.08 percent), Canada (11.67 percent) and Thailand
(7.46 percent).
The launch of IOIL comes approximately one month after IndexIQ launched
the IQ Global Agribusiness Small Cap ETF (NYSE Arca: CROP), another first
of its kind fund that provides exposure to the fast-growing agribusiness
sector.
“Our two most recent launches, IOIL and CROP, reflect our continued belief
that investors can find significant opportunities in the demand that
currently is permeating the commodities space,” continued Patti. “And we
strongly believe that small capitalization companies offer the most
effective avenue for translating that demand into significant growth. We
have been very pleased with the marketplace’s reaction to CROP and we’re
excited to be following that launch with IOIL.”
In addition to IOIL, IndexIQ has a robust suite of commodities and natural
resources ETFs including:
IQ Global Resources ETF (NYSE Arca: GRES), the first global natural
resources ETF;
IQ Global Agribusiness Small Cap ETF (NYSE Arca: CROP), the first
global agribusiness
small cap ETF
IQ Canada Small Cap ETF (NYSE Arca: CNDA), the first Canada small cap
ETF;
IQ Australia Small Cap ETF (NYSE Arca: KROO), the first Australia
small cap ETF;
IndexIQ is also the sponsor of a number of index-based liquid alternative
investment products designed to “democratize” the alternative investment
landscape, including:
IQ Alpha Hedge Strategy Fund (IQHIX – Institutional Share Class; IQHOX
– Investor Share
Class), the first open-end, no-load Hedge Fund Replication mutual fund;
IQ Hedge Multi-Strategy Tracker ETF (NYSE Arca: QAI), the first US-
listed Hedge Fund Replication Exchange-Traded Fund;
IQ Hedge Macro Tracker ETF (NYSE Arca: MCRO), the first Global Macro
Hedge Fund ETF;
IQ Merger Arbitrage ETF (NYSE Arca: MNA), the first Merger Arbitrage
ETF;
IQ Real Return ETF (NYSE Arca: CPI), the first US-listed “Real Return”
ETF, which seeks to generate a real return above the rate of inflation as
measured by changes in the Consumer Price Index;
IQ South Korea Small Cap ETF (NYSE Arca: SKOR), the first South Korea
small cap ETF;
IQ Taiwan Small Cap ETF (NYSE Arca: TWON), the first Taiwan small cap
ETF.
IndexIQ products are designed to be liquid, transparent, low cost, and
accessible to a broad rangeof investors.*
About IndexIQ
Based in Rye Brook, New York, IndexIQ is a leading developer of index-
based liquid alternative investment solutions that combine the benefits of
traditional index investing with the risk-adjusted return potential sought
by the best active managers. The company’s philosophy is to democratize
investment management by making innovative alternative investment
strategies available to investors in low cost, liquid and transparent
products. IndexIQ strategies are marketed through the company’s
proprietary investment products and select partnerships with leading
global financial institutions. Additional information about the company
and its products can be found at www.IndexIQ.com.
*Ordinary brokerage commissions apply. IndexIQ’s ETF holdings are
available daily on IndexIQ’s website. ETFs are liquid in that they are
exchange-traded.
As IOIL’s investments are concentrated in the oil sector, the risks and
hazards inherent in the industry may cause the price of crude oil to
widely fluctuate, which may have a negative effect on oil companies.
Government regulation may impact the price of crude oil and the
performance of oil companies. The Fund is susceptible to foreign
securities risk. Since the Fund invests in foreign markets, it will be
subject to risk of loss not typically associated with domestic markets.
The Fund is concentrated in small capitalization companies, whose stock
prices generally are more volatile than those of larger companies and also
are more vulnerable than those of large capitalization companies to
adverse business and economic developments. Both the Fund’s ability to
track its Index and Fund returns in general may be adversely impacted by
changes in currency exchange rates. The ETF is new and has limited
operating history. The fund is not suitable for all investors. Investors
in the Fund should be willing to accept a high degree of volatility in the
price of the Fund's Shares and the possibility of significant losses. An
investment in the Fund involves a substantial degree of risk and the Fund
does not represent a complete investment program.
Investors are reminded that all investing involves risk, including
possible loss of principal. Consider the Funds’ investment objectives,
risks, charges and expenses carefully before investing. A prospectus with
this and other information about the Funds may be obtained by visiting
www.indexiq.com or by calling (888) 934-0777. Read the prospectus
carefully before investing.
The Funds are distributed by ALPS Distributors, Inc. (ALPS), which is not
affiliated with IndexIQ. Adam Patti is a registered representative of
ALPS.
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