Market Vectors, the exchange-traded fund division of investment management firm Van Eck Global, has announced the launch of the Market Vectors Oil Refiners ETF (CRAK), an NYSE Arca-listed fund providing pure-play exposure to oil refinery companies.
The newly listed Market Vectors Oil Refiners ETF (CRAK) provides pure-play exposure to the global oil refining industry.
The fund is linked to the Market Vectors Global Oil Refiners Index, which measures the performance of the largest and most liquid companies in the global oil refining segment.
“The profitability of refiners is generally influenced by the spread between the cost of crude oil and the prices at which refined products can be sold, commonly known as crack spreads,” said Brandon Rakszawski, product manager at Van Eck Global. “Oil refiners have tended to react differently to the price of oil compared to other energy sector companies. Historically, the return profile is differentiated from other segments of the sector, a trend that has persisted year-to-date.”
Indeed, the Market Vectors Global Oil Refiners Index has returned 18.5% year-to-date (19 August), more than double the return on the Market Vectors US Listed Oil Services Index.
“The development of the Market Vectors Global Oil Refiners Index was a strategic decision to provide complete exposure to the oil industry. The index complements the coverage of the Market Vectors US Listed Oil Services Index which underlies exchange-traded products with about $1.2 billion invested,” added Lars Hamich, CEO of index provider Market Vectors Index Solutions. “Oil refiners tend to be less correlated to the oil price than oil services companies.”
There are currently 25 holdings in the fund, of which the top concentrations currently include Marathon Petroleum (8.7%), Phillips 66 (8.5%), Valero Energy (8.3%), Tesoro (7.0%) and Reliance Industries (6.9%). Country exposures are tilted heavily towards the US (49.4%), while Japan (10.4%) and India (6.8%) provide the second and third largest exposures. The fund has various currency exposures including most notably the US dollar (53.4%) but also the Japanese Yen (13.3%) and euro (8.5%). The total expense ratio is 0.59%. (Data as of 20 August).
Market Vectors has established itself as a leading provider of specialist energy-sector ETFs, with funds including the Market Vectors Oil Services ETF (OIH), the Market Vectors Unconventional Oil & Gas ETF (FRAK), the Market Vectors Global Alternative Energy ETF (GEX), the Market Vectors Solar Energy ETF (KWT), the Market Vectors Coal ETF (KOL), and the Market Vectors Uranium+Nuclear Energy ETF (NLR).