T. Boone Pickens ETF Rolls Out

February 28, 2018

T. Boone Pickens lent his name to an ETF that launched today and targets energy companies that move in sync with the price of crude oil. The NYSE Pickens Oil Response ETF (BOON) tracks an index provided by TriLine Index Solutions, which is also the fund’s investment adviser, and is indirectly controlled by Pickens.

BOON comes with an expense ratio of 0.85% and lists on the NYSE Arca.

Its underlying index focuses on companies whose performance positively correlates with that of ICE Brent Crude Oil Futures. The component list includes firms on the energy production end of things, such as those engaged in energy exploration and production, oil services and refining, among other activities. The companies on the energy consumption end include those in the aerospace and defense, chemicals, homebuilding, metal fabrication, transportation and water industries, the prospectus says.

Methodology

The methodology considers correlations among the largest 1,000 U.S.-listed stocks over a range of time periods, from the trailing three-month period to the past five years.

To be included in the index, a company’s stock must meet size and liquidity requirements, and its correlations must rank in the top 40% for all of the time periods considered. Those with exposure to the most energy-intensive industries are selected for the index. The prospectus notes this is expected to primarily include the energy industrials and materials sectors.

Components are equal-weighted, with rebalances occurring quarterly. Reconstitutions are scheduled annually. As of mid-December, the index included 81 securities, according to the prospectus.

Heather Bell can be contacted at [email protected]

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