WisdomTree, an exchange traded fund ("ETF") and exchange traded
product ("ETP") sponsor, has today announced a change to the
underlying index tracked by WisdomTree WTI Crude Oil ETC (CRUD),
following a vote by security holders. The index change was
completed on August 4, 2020 and is exclusive to WisdomTree.
The new index, the Bloomberg WTI Crude Oil
Multi-Tenor Excess Return Index, is the result of extensive work
between WisdomTree and Bloomberg to create an index which would be
resilient to extreme conditions in the WTI Crude Oil market. The
index aims to track the performance of an equal-weight basket of
three WTI Crude Oil future contracts and is rebalanced monthly.
Alexis Marinof, Head of Europe,
WisdomTree, said: “CRUD is the largest and most liquid oil
ETC in Europe, and WisdomTree is committed to ensuring that it
provides the best oil investment experience in the industry. We
have just endured a period of unprecedented market volatility with
markets exhibiting new types of disruptions that were never before
seen, including the appearance of negative prices in WTI
contracts.”
By moving CRUD to an index that spreads risk
among three WTI contracts, WisdomTree is aiming to provide
investors with greater future protection from the type of extreme
conditions we have seen this year. In particular, the new index was
designed by WisdomTree to offer greater resiliency with respect to
negative or zero prices as well as enhanced liquidity for CRUD in
these scenarios.
The approach continues to maintain exposure and
performance that is towards the front of the futures curve, which
should allow investors to continue to use CRUD both strategically
and tactically. The new index has also shown historically reduced
performance drag when oil is in contango, which can be a concern
for investors.
Alexis Marinof
added: “We have listened to investor feedback,
working tirelessly with our partners to ensure CRUD is more robust
than ever. We will continue to look at enhancing our product suite
ensuring we offer the most comprehensive and robust range of energy
ETCs for investors.”
While WisdomTree’s WTI Crude Oil ETCs did not
face the prospect of having to replicate a negative price as they
were tracking slightly further-dated futures contracts, the
unprecedented events of April 2020 highlighted that it is possible
for futures contracts to trade at a negative price. The changes
made will mitigate the risk of the index going negative.
The new index has a price floor at zero and,
unlike other indices tracked by oil ETCs, cannot go negative. For
the new index to reach the zero floor, the average price of the
three futures contracts would need to drop below zero compared to
only one futures contract with the previous index. With exposure to
WTI Crude Oil diversified across multiple contracts instead of only
one, CRUD will also benefit from improved liquidity and reduce the
concentration in a given futures contract.
Jarrett Lilien, President and COO,
WisdomTree, concluded: “We have just
experienced one of the most challenging market environments ever.
Our team managed through it, and we remained true to our heritage,
using it as an opportunity to innovate. The result is a best in
class product designed to endure extreme market conditions,
helping investors navigate the financial markets.”
WisdomTree is the leader in European energy
ETCs1, with a 70% market share represented by $2.4bn in Assets
under Management.
For further information, please contact:Arran
Fano, PR and Communications, +44 20 7448 4336 /
AFano@WisdomTree.comJessica Zaloom, Head of Corporate
Communications and Public Relations, +1 917 267 3735 /
JZaloom@wisdomtree.com
About WisdomTree
WisdomTree Investments, Inc., through its subsidiaries in the
U.S. and Europe (collectively, “WisdomTree”), is an exchange-traded
fund (“ETF”) and exchange-traded product (“ETP”) sponsor and asset
manager headquartered in New York. WisdomTree offers products
covering equities, fixed income, currencies, commodities and
alternative strategies. WisdomTree currently has
approximately $61.1 billion in assets under management
globally. For more information, please visit
www.wisdomtree.com.
WisdomTree® is the marketing name for WisdomTree Investments,
Inc. and its subsidiaries worldwide.
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