T. Boone Pickens’ ETF 'BOON' Proposed

February 01, 2018

T. Boone Pickens may be retired for all intents and purposes, but his name is front and center on a pending equity ETF.

Oil tycoon Pickens shuttered his hedge fund just few weeks ago and put his massive ranch up for sale. But don’t expect his name to disappear from the investment world entirely. The NYSE Pickens Oil Response ETF (BOON) could be close to launching.

The fund will track an index by the same name and focus on companies whose performance positively correlates with that of ICE Brent Crude Oil Futures.

The companies in the fund include firms on the energy production end of things such as those engaged in energy exploration & production, oil services and refining, among other activities. The companies on the energy consumption end include those in the aerospace & 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. Only those with exposure to the most energy-intensive industries are selected for the index.

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.

The document further notes that the fund’s advisor TriLine Index Solutions LLC is controlled indirectly by Pickens. BOON will list on the NYSE Arca and come with a rather hefty expense ratio of 0.90%.

Contact Heather Bell at [email protected]

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