Frequently Asked Questions
What are oil sands? Where are they located?
Oil sands are a form of natural crude oil that is combined with sands, clay and water. Oil sands are located throughout the world but the largest known concentration is located in northern Alberta, a province of Canada.
What is the Sustainable North American Oil Sands ETF (SNDS)?
The Sustainable North American Oil Sands ETF (SNDS on NYSE Arca) is the first US-listed ETF dedicated to investing in the largest source of crude oil outside of OPEC nations, Canada’s Oil Sands. The fund invests in companies that cover all aspects of extracting Canada’s Oil Sands and getting them to market. The companies in the fund are large cap and highly liquid and include companies based in Asia, Canada, Europe and America.
Can you describe the underlying index and the methodology?
The fund is based on the Sustainable North American Oil Sands Index® developed by Sustainable Wealth Management, Ltd., a Calgary, Alberta-based index provider responsible for the original benchmark Sustainable Oil Sands Sector Index® (SOSSI
The index is designed to measure the performance of companies whose operations in the North American oil sands include oil exploration, production, refinement, marketing, storage, transportation, provision of equipment and/or provision of services.
Canadian- and U.S.-listed stocks are eligible for the Sustainable North American Oil Sands Index®. The number of constituents is expected to range between 25 and 40 depending on the depth of the market. There will be 31 constituents in the index when SNDS is launched. The constituents are equal weighted and rebalanced quarterly. As of May 25, 2012 the index has a 3.07% dividend yield, 15.7 average price to earnings ratio, $50.4 Billion average market capitalization and $162,300,000+ average daily value of shares traded per constituent (using the last 100 days of volume).
Why invest in SNDS?
Canada’s oil sands represent the largest source of crude oil reserves that can be privately owned (as opposed to OPEC countries where national oil companies own and control the oil). The oil is located close to existing infrastructure that is connected to the US. SNDS may be considered a means to invest in those companies that stand to benefit most from the United States’ effort to move a significant portion of their energy dependence to North American resources. Canada follows common law, supports private property rights and is actively promoting the development of the oil sands. According to a recent quality of life survey, (Center for the Study of Living Standards, May 18, 2012, see Human Development by Province; Study Ranks Quality of Life across Canada, http://www.HuffingtonPost.ca) Canada is one of the safest, most stable economies in the world. Canada could be a direct beneficiary of instability in other oil producing regions and rising global energy demand. (Source www.iea.org for rising demand and discussion of instability in oil producing regions, WEO 2011).
How often will you rebalance SNDS?
The fund is rebalanced every quarter to match the changes in the underlying index. Mergers and acquisitions, spinoffs and large cash dividends might result in additional rebalances in between each quarter.
What are the fees associated with SNDS?
The management expense for the fund is 0.50%, below the sector average and similar to the largest energy sector ETFs with an international focus. (Energy Equities category average fee is 0.52% with 29 ETFs, fees ranging from 0.18% to 0.85% Source: www.etfdb.com/etfdb-category/energy-equities/)
Who should consider investing in SNDS?
SNDS is designed to give investors who want global energy sector exposure with visible growth prospects and an above average investment yield. It gives direct access to the fast growing oil sands sector and is diversified by energy subsectors and companies are based in several key geographic regions such as Asia, Europe and North America.
What is unique about the SNDS approach?
This fund tracks an index that is equally weighted to provide less concentrated exposure to the largest companies and more meaningful exposure to companies with outstanding growth prospects. According to the Alberta government, there is $200 Billion+ in planned investment in the sector over the next ten years. The majority of energy-sector ETFs are invested on a market cap basis. This means that much of the assets are concentrated in just 5 to 10 companies that have extremely large market capitalization (Source: www.etfdb.com/etfdb-category/energy-equities/)
How do I invest in SNDS?
Investing in SNDS is as simple as placing an order in your brokerage account for SNDS on the NYSE Arca exchange.
What is Sustainable Wealth Management?
Sustainable Wealth Management Ltd is a Calgary-based index provider founded by Derek Gates, CFA, the creator of the world’s first Canadian oil sands index. The company provides index information to numerous ETF providers in Canada, Europe and the US. SNDS is SWM’s second US listed ETF following the Guggenheim Canadian Energy Income ETF (ENY – NYSE Arca).
Where can I find more information about Sustainable Wealth Management?
The index company website is swmindex.com. The ETF website is swmetfs.com.
Who are your strategic partners?
Index Provider: Sustainable Wealth Management Ltd
Custodian: Brown Brothers Harriman
Fund Administration: SEI Investments Global Funds Services
Fund Sponsor: Exchange Traded Concepts LLC
Legal: Bingham McCutchen LLP
Carefully consider the Fund's investment objectives, risk factors, charges and expenses before investing. This and additional information can be found in the Fund's prospectus, which may be obtained by visiting swmetfs.com. Read the prospectus carefully before investing.
Investing involves risk, including the possible loss of principal. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles, or from economic or political instability in other nations. Companies in the energy and oil sectors develop and produce crude oil and provide drilling and other energy resources production and distribution related services. Stock prices for these types of companies are affected by supply and demand both for their specific product or service and for energy products in general. The price of oil, exploration and production spending, government regulation, world events and economic conditions will likewise affect the performance of these companies. Correspondingly, securities of companies in the energy sector are subject to swift price and supply fluctuations caused by events relating to international politics, energy conservation, success of exploration projects, and tax and other governmental regulatory policies. Weak demand for the companies' products or services or for energy products and services in general, as well as negative developments in the energy sector generally, would adversely impact the Fund's performance. Certain oil and energy companies can be significantly affected by natural disasters as well as changes in exchange rates, interest rates, government regulation, world events and economic conditions. These companies may be at risk for environmental damage claims. Oils sands reserves produce what is sometimes referred to as synthetic crude oil, to be distinguished from conventional crude oil produced from traditional oil reserves. The marketability of synthetic crude oil is affected by many of the same factors that affect conventional crude oil and the energy sector in general including, but not limited to, market fluctuations of prices and government regulation. However, because operating costs to produce synthetic crude oil from oil sands may be substantially higher than operating costs to produce conventional crude oil, an increase in such costs or a reduction in the price of synthetic crude oil or competing products may render mining resources from oil sands uneconomical. A significant decrease in the price of conventional crude oil may have a negative impact on the economic viability of oil sands projects. The fund invests in the energy industry, which entails greater risk and volatility. The Fund is non-diversified. There is no guarantee that income will be paid.
Exchange Traded Concepts, LLC serves as the investment advisor, and Index Management Solutions, LLC serves as a sub advisor to the fund. The Funds are distributed by SEI Investments Distribution Co., which is not affiliated with Exchange Traded Concepts, LLC or any of its affiliates. SNAOS Indexes have been licensed for use by Exchange Traded Concepts, LLC. SWM Funds are not sponsored, endorsed, issued, sold, or promoted by SNAOS, nor does this company make any representations regarding the advisability of investing in the SWM Funds.
Index data source: SNAOS Index.