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.”