Oil ETF To Launch On London Stock Exchange

by Phillip Morton, Investors Offshore.com

18 July 2005

A new oil-based exchange traded fund (ETF) is due to be launched on the London Stock Exchange at the end of the month allowing investors to buy securities that will closely track the price of crude oil on the international market.

The ETF is being introduced by the the company Oil Securities, which is backed by Graham Tuckwell who, in 2003, introduced the first gold-based ETF in Australia.

The company has stated that the oil ETF will "provide investors with a simple, efficient and cost-effective way of accessing the oil market" and allow investors to gain exposure to the oil market without buying or taking physical delivery of oil, or trade in oil futures contracts or covered warrants.

Until now, the only way investors could take advantage of rising oil prices was either through buying shares in major oil firms such as BP and ExxonMobil, or by buying futures contracts on the energy exchanges in London and New York.

Oil Securities plans to launch at least one fund on the LSE on July 28, and may introduce others depending in the response from investors at roadshows over the coming days.

According to the Financial Times, one security would track the near month of the Brent Crude futures contract traded on London's International Petroleum Exchange, while another would track the West Texas Intermediate contract on the New York Mercantile Exchange.

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