ETF Watch: Launch Brings ETF Count To 2,000

April 26, 2017

Credit Suisse has added another ETN to its lineup of ETNs offering exposure to a commodity combined with a covered-call strategy. The Credit Suisse X-Links Crude Oil Shares Covered Call ETN (USOI) provides returns that reflect the returns of the United States Oil Fund (USO) and of the sale of monthly call options on USO, along with the associated transaction costs.

USOI is listed on the Nasdaq and comes with an investor fee of 0.85%.

The new ETN joins the Credit Suisse X-Links Gold Shares Covered Call ETN (GLDI) and the Credit Suisse X-Links Silver Shares Covered Call ETN (SLVO), which offer similar strategies, except they target the SPDR Gold Trust (GLD) and iShares Silver Trust (SLV), respectively.

USOI's launch pushes the total number of U.S.-listed ETFs to 2,000 products. 

Elkhorn Files For Lending Fund

Elkhorn has filed for an ETF that will rely on a securities-lending strategy. The Elkhorn Rich Hard To Borrow Securities ETF (HARD) is actively managed, and will follow a strategy in which it purchases securities that have been determined to be hard to borrow and then lends them out for premium income.

The fund will rely on a “Rich Hard-To-Borrow” list that is the result of a proprietary selection methodology that looks at short interest for different stocks and other firms’ “hard to borrow” lists. This involves the unnamed firm that maintains the Elkhorn fund’s list developing its own relationships with other firms that produce their own “hard to borrow” lists, which are generally not public, the prospectus said.

The fund’s list may include equities, fixed-income securities, other ETFs and closed-end funds, according to the prospectus. Interestingly, the document also specifically states that the fund will not select stocks with the goal of price appreciation and will look to hold a market-neutral position with regard to its portfolio. It will even use derivatives to neutralize price movements.

Market Expectations

The Elkhorn fund will select securities based on the expected returns associated with lending them out, minus any hedging and trading costs. The manager will also take into account its expectations for markets and each security’s size and liquidity.

The prospectus further notes that the fund will likely have higher-than-average turnover.

The filing did not include an expense ratio, but it did indicate that the fund will list on the Bats exchange, which is owned by ETF.com's parent company CBOE.

Contact Heather Bell at [email protected].

 

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