CALGARY, Feb. 17, 2016 /CNW/ - To date, there has been a
considerable amount of confusion with respects to the true meaning
of a pure play in Canadian crude oil. Despite the claims of
Canadian producers and a general willingness to quote global
benchmarks as performance indicators, only one pure play in
Canadian crude exists globally – the Canadian Crude Index ETF (TSX:
CCX).
A pure play in Canadian crude reflects the attributes of the
underlined commodity without the added distraction and investment
risk of the stock market. Typically, this is achieved through
publicly-traded commodity futures or ETFs that solely contain
exposures to the commodity in question.
While producers may lay claim to being exclusively tied to crude
oil in Canada, their performance
hinges upon a myriad of factors that are not underpinned by the
actual commodity. Companies that are publicly-listed on a stock
exchange have a high market correlation (beta), and their
valuations can be based on factors that are unrelated to oil, such
as production costs, the overall structure of the organization, and
debt or equity financing.
Further confusion is generated by a general willingness to
interchange global benchmarks with the performance of Canadian
crude. While often quoted as the universal price of oil by media
and Canadian producers, West Texas Intermediate ("WTI") is an
inaccurate indicator of the crude produced in Canada from both a structural and physical
standpoint. The benchmark is unable to accurately track the price,
volatility, risk and opportunity of the Canadian commodity, and
represents a grade of oil that substantially differs from
North America's marginal barrel –
Canadian heavy sour crude.
"In order for Canadian crude to thrive on a global scale, we
need participation that goes beyond the physical wholesale market."
said Tim Pickering, Founder and CIO
of Auspice Capital Advisors (Auspice). "We need a true pure play –
one that encourages liquidity and grants access to global
participants who wish to solely be exposed to the price of Canadian
crude."
The CCX tracks the price of the Canadian Crude Index (CCI™)
which allows investors to identify opportunities and speculate
outright on the price of Canadian crude oil. Priced in U.S.
dollars, the CCI™ employs a rolling three-month exposure in order
to improve liquidity, lower transaction costs and reduce the
effects of contango. Each trading day, the index value is
determined by its third-party calculation and publication agent,
the NYSE Global Index Group, based on daily returns of prices
published by ICE Futures Europe.
The CCX capitalizes on the current market's performance by
replicating the returns that an investor would expect to receive
from holding and rolling the contracts enclosed within the
benchmark index. It is the only pure play in Canadian crude.
Commissions, trailing commissions, management fees and
expenses all may be associated with an investment in the ETF. The
ETF is not guaranteed. Its value changes frequently and past
performance may not be repeated. Please read the prospectus before
investing.
About Auspice Capital Advisors, Ltd.
Auspice is a Calgary-based Canadian fund manager of
non-correlated alternatives which since 2006 has partnered with
global institutional and retail clients. Led by a respected PM team
with institutional pedigree from an Energy major and Canadian bank,
Auspice employs a disciplined, rules-based approach to investment
management and manages a suite of award-winning and innovative
investment products available in a variety of delivery mechanisms
(funds, ETFs, indices, managed accounts).
Auspice is registered as a portfolio manager (IFM, CTM, EMD)
in Canada and a CTA with the NFA. Auspice is the manager
and trustee of the ETF, and is responsible for providing or
arranging for the administrative and third party services
required.
SOURCE Auspice Capital Advisors Ltd.