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Oslo Børs has approved the admission to listing of the securities funds ABG Sundal Collier Oil Derivative Long and ABG Sundal Collier Oil Derivative Short. These funds are what are known as exchange traded funds, and are the first funds based on commodity prices to be listed on Oslo Børs.
As an important exchange for energy-related securities, Oslo Børs is confident that investors will find funds of this type to be an attractive product. The first day of listing for the two funds will be 5 March 2009.
As the names of the funds indicate, they offer investors the opportunity to gain a direct exposure to the oil price on the basis either that they believe the oil price will go up (long) or that the oil price will go down (short). The funds invest solely in financial instruments for which the underlying commodity is the world's most widely traded oil type, West Texas Intermediate (WTI).
The return produced by the funds will reflect changes in value of the fund's holdings of oil futures contracts (denominated in USD), movements in the USD/NOK exchange rate and income from short-term interest-bearing investments. The oil futures contracts held by the Oil Derivative Short fund will be short positions, hence a fall in futures prices will increase the value of the fund and a rise in futures prices will reduce the fund's value.
As with other exchange traded funds, investors will be able to buy and sell units in the funds in the same way as buying or selling shares, i.e. through an investment firm that is a member of Oslo Børs.
A round lot in these oil-based funds will be 500 units, and the price at the time the funds are admitted to listing will be set at NOK 20 per unit.
Both funds will be restricted to investing in financial instruments, including commodity derivatives with WTI as the underlying instrument, and/or bank deposits. The funds will strive to achieve 100% exposure to WTI, and will use derivatives (futures contracts) to achieve this.
More about Exchange Traded Funds
An Exchange Traded Fund (ETF) is a fund that is traded on the stock
exchange and offers investors the opportunity of investment exposure to an
underlying asset class just as easily as buying or selling shares. The
management charges for ETFs are typically lower than for traditional mutual
securities funds.
