Industry Updates

WisdomTree changes benchmark for WTI Crude Oil ETC

The underlying index cannot go below zero

George Geddes

a man in a suit

WisdomTree has changed the underlying index tracked by the WisdomTree WTI Crude Oil ETP (CRUD) following a vote by security holders.

The Bloomberg WTI Crude Oil Multi-Tenor Excess Return index has replaced the Bloomberg WTI Crude Oil Subindex Total Return index as benchmark for the $1.7bn ETC.

WisdomTree and Bloomberg collaborated for the updated index so it could be more resilient to extreme conditions in the WTI crude oil market.

In April, the price of oil fell as low as $-37 a barrel before CRUD’s creations had to be suspended as investors tried to pile into the ETC for the rebound.

The index aims to track the performance of an equal-weighted basket of three WTI crude oil future contracts and is rebalanced monthly.

One objective of the index is to not go below zero. For the index to reach its zero floor, the average price of the three futures contracts would need to drop below zero compared to just the one futures contract with the previous index.

Outflows for Europe’s largest oil ETP following creations suspension

Alexis Marinof (pictured), head of Europe at WisdomTree, commented: “We have just endured a period of unprecedented market volatility with markets exhibiting new types of disruptions that were never before seen, including the appearance of negative prices in WTI contracts.

“We have listened to investor feedback, working tirelessly with our partners to ensure CRUD is more robust than ever. We will continue to look at enhancing our product suite ensuring we offer the most comprehensive and robust range of energy ETCs for investors.”

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