.jpg)
The first ever ETF tracking the crude oil market listed on the Taiwan Stock Exchange (TWSE) on 7 September 2015, representing another step in the further diversification of Taiwan’s ETF market.
The ‘Yuanta S&P GSCI Crude Oil ER Futures ETF’ (Yuanta Oil, code: 00642U), issued by Yuanta Securities Investment Trust Co., Ltd., will track the S&P GSCI Crude Oil Enhanced Excess Return Index, which covers crude oil futures contracts listed on the New York Mercantile Exchange (NYMEX). The index largely reflects the price of West Texas Intermediate (WTI) with an up to 93% correlation with the crude oil spot market, making it a highly effective trading instrument.
It is the second commodity ETF to list on TWSE following the listing of the ‘Yuanta S&P GSCI Gold ER Futures ETF’ on 15 April 2015. Both futures-based ETFs are eligible for margin trading and short selling, allowing investors to use leverage and implement diverse trading strategies to profit from both bull and bear markets.
Michael Lin, President of the Taiwan Stock Exchange, said: “The expanding range of futures-based commodity ETFs available on TWSE is helping investors diversify their asset allocations to include gold and energy markets, in addition to Taiwan and Mainland equities, while also allowing them to hedge their exposure to various commodity markets. ETFs also offer additional transparent, convenient and low-cost investment options to investors.”
Taiwan will be the first market in the Greater China region to offer a crude oil-tracking ETF. It joins Japan and South Korea as being one of the few markets to offer such a product in the Asia-Pacific.
Commodity ETFs are one of the fastest growing segments of the ETF market, with the total value of the global market growing more than 400 times from US$300 million in 2003 to US$120.5 billion in June 2015, according to BlackRock.
The value and turnover of Taiwan’s ETF market has also increased significantly since the introduction of leveraged and inverse ETFs in October 2014 and gold futures ETFs in April 2015. In the month of July 2015, the total size of the Taiwan ETF market was NT$234.7 billion, with an average trading value of NT$9.8 billion. This represented 10.62% of total trading on TWSE.
