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MicroSectors launches Oil and Gas leveraged and inverse ETNs


Oil and gas exploration and extraction is an essential industry to the US economy, providing millions of job opportunities and billions of dollars in investments writes index provider Solactive. 

BMO and REX Shares have partnered to bring two MicroSectors ETNs to the market. MicroSectors Oil & Gas Exploration & Production 3x Leveraged ETN (OILU) and MicroSectors Oil & Gas Exploration & Production -3x Inverse Leveraged ETN (OILD).

Solactive writes that leveraged and inverse leveraged ETNs are designed to allow sophisticated investors to take high-conviction positions on the movement of an underlying benchmark. These types of ETNs reset every day, which means they are only designed to accomplish the stated leverage objective on a daily basis. 

Both OILU and OILD use the Solactive MicroSectors Oil & Gas Exploration & Production Index as their underlying index, with OILU and OILD corresponding to three times (300 per cent) long and inverse the daily performance of the underlying index, respectively.

The Solactive MicroSectors Oil & Gas Exploration & Production Index tracks the performance of US-listed companies actively involved in the exploration and production of oil and gas. Companies classified as Integrated Oil and Gas Exploration and Production, Upstream Energy, or Downstream and Midstream Energy under the FactSet Revere Business Industry Classification System (“RBICS”) are eligible for inclusion. There are minimum market capitalisation and minimum average daily value traded requirements on new and current index components. The index is published in US Dollars (USD) and is rebalanced quarterly with monthly reweighting.

“Oil and gas remain the most important factor of the energy mix,” comments Timo Pfeiffer, Chief Markets Officer at Solactive. “We are thrilled to be working with BMO and REX to bring a unique suite of leveraged and inverse leveraged offerings to the market.”

“We are excited to bring another pair of leveraged and inverse leveraged exchange-traded notes to market with BMO and Solactive. We believe the Oil & Gas Exploration & Production Index will provide sophisticated investors access to a new benchmark for the Oil & Gas E&P equity universe. Other E&P focused indices include many allocations to smaller players in the industry. We believe there are advantages to including both large and small energy companies – not one or the other,” comments Scott Acheychek, President of REX. “MicroSectors focuses on improving the exchange traded product landscape by offering targeted indices across popular market segments. We believe adding U.S. E&P to our product lineup furthers this goal.”

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