Market Overview

Exchange Traded Concepts to Launch Oil Sands ETF


Exchange Traded Concepts will introduce the Sustainable North American Oil Sands ETF (NYSE: SNDS) on Tuesday June 12. The Sustainable North American Oil Sands ETF will track the Sustainable North American Oil Sands Index and charge an annual expense ratio of 0.5%.

To be eligible for inclusion in the index, companies must have a minimum market cap of $3 billion and have a 100-day average trading volume of at least $5 million. The index had 31 constituents as of March 7, 2012, according to filing issued by Exchange Traded Concepts.

Oklahoma-based Exchange Traded Concepts offers an "ETF-In-A-Box" solution that helps issues lower the costs of introducing new funds and bring those ETFs to market in about 75 days, according to the firm's Web site. In recent months, the firm has helped introduce the Yorkville High Income MLP ETF (NYSE: YMLP) and the AlphaClone Alternative Alpha ETF (NYSE: ALFA).

YMLP has attracted almost $36.5 million in assets under management since its mid-March debut. ALFA, which has an inception date of May 31, now has almost $2.6 million in AUM.

While the boom in Western Canada's oil sands region has helped the U.S. obtain crude from a friendly source and by some estimates means Canada is home to the largest oil reserves in the world outside of Saudi Arabia, there are risks associated with oil sands crude.

"However, because operating costs to produce synthetic crude oil from oil sands may be substantially higher than operating costs to produce conventional crude oil, an increase in such costs or a reduction in the price of synthetic crude oil or competing products may render mining resources from oil sands uneconomical.

"A significant decrease in the price of conventional crude oil may have a negative impact on the economic viability of oil sands projects. In addition, other developments, such as increasingly strict environmental and safety laws and regulations and enforcement policies thereunder, particularly in areas with a high concentration of oil sands, and local, native and political opposition to oils sands exploration and refinement, could result in substantial costs and liabilities, delays or an inability to complete projects or the abandonment of projects," according to the filing for SNDS.

Other ETFs with significant exposure to the Canadian oil sands region include the Guggenheim Canadian Energy Income ETF (NYSE: ENY) and the newly minted Market Vectors Unconventional Oil & Gas ETF (NYSE: FRAK).


Related Articles (SNDS + FRAK)

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