Credit Suisse (CS) may have sensed that recent trading issues with Barclays’ (BARC) oil-tracking exchange-traded note represented an opportunity to grab market share from a rival. Enter the X-Links WTI Crude Oil Index ETN (OIIL), which launched on Tuesday with a structure meant to improve upon the quirks of the $562 million iPath S&P GSCI Crude Oil Total Return Index ETN (OIL).
A spokesman for Credit Suisse declined to comment on the timing of the ETN’s launch.
Recall that OIL last month jumped to a nearly 50% “premium” over the value of the oil-futures index it purports to track; this was a problem when a subsequent ETN price crash confounded ordinary investors trying to profit from a rebound in crude. Barclays said, after the crash, that investors should “exercise extreme caution” when it comes to OIL.
Investors still should stay away from OIL because the same thing could happen again, and even Barlcays says that’s true. OIL continues to trade at a price that’s 17% richer than its oil-tracking benchmark. (Here’s how to tell: Compare the the prices of the ETN (ticker: OIL) with the intraday price of the underlying index, which can be found on Yahoo Finance using this ticker (^OIL-IV)). Dave Nadig at FactSet spells out why this premium is likely to persist, or, put another way, why this ETN is “broken by design.”......MORE
Barclays Oil ETN Is Trading at A 40% Premium To Its Benchmark (OIL)