MicroSectorsTM Oil & Gas Exploration & Production 3X Leveraged ETNs (OILU)

ETF MicroSectors™ Oil & Gas Exploration & Production 3X Leveraged ETNs (OILU)

Profile:

• Focus: OILU is an exchange-traded note (ETN) that aims to deliver three times (3x) the daily performance of the Solactive GSOI Crude Oil Downstream Total Return Index. This index tracks companies involved in the exploration and production of oil and gas.
• Asset Allocation: The ETN invests in a basket of total return swaps referencing the index components.
• Investment Strategy: OILU uses leverage to amplify the returns of the underlying index. This means it can potentially generate higher returns than a traditional oil and gas ETF, but also carries higher risk.

Objective:

The primary objective of OILU is to provide investors with leveraged exposure to the Crude Oil Downstream sector. This allows investors to potentially magnify their gains or losses on the sector's performance.

Issuer:

• Company: VelocityShares, LLC.
• Reputation and Reliability: VelocityShares is a prominent issuer of ETNs and exchange-traded products (ETPs).
• Management: The firm has a team of experienced professionals with expertise in financial markets and derivative products.

Market Share:

OILU has a relatively small market share within the Oil & Gas Exploration & Production sector. However, it is one of the few ETNs offering leveraged exposure to this sector.

Total Net Assets:

As of October 26, 2023, OILU has approximately $1.2 million in total net assets.

Moat:

OILU's primary competitive advantage is its leveraged exposure, which can potentially amplify returns compared to traditional oil and gas ETFs. Additionally, the ETN offers investors a convenient way to access the Crude Oil Downstream sector without directly purchasing individual stocks.

Financial Performance:

OILU has historically exhibited strong performance, significantly outperforming the underlying index due to its leverage. However, it is important to note that past performance is not indicative of future results.

Benchmark Comparison:

OILU has outperformed the Solactive GSOI Crude Oil Downstream Total Return Index in most recent periods. This is due to the ETN's leverage, which magnifies the returns of the underlying index.

Growth Trajectory:

The growth trajectory of OILU is closely tied to the performance of the Crude Oil Downstream sector. As the sector grows, so too should the ETN's assets and trading volume.

Liquidity:

OILU has a relatively low average trading volume, which can impact its liquidity and potentially lead to wider bid-ask spreads.

Market Dynamics:

Factors affecting OILU's market environment include: oil price fluctuations, global economic conditions, geopolitical events, and changes in the oil and gas industry.

Competitors:

• Direxion Daily Energy Bull 3X Shares (ERX): Market Share: 12.5%
• ProShares Ultra Bloomberg Crude Oil (UCO): Market Share: 9.5%

Expense Ratio:

OILU has an expense ratio of 0.95%. This includes management fees and other operational costs.

Investment Approach and Strategy:

• Strategy: OILU aims to track the Solactive GSOI Crude Oil Downstream Total Return Index by investing in total return swaps.
• Composition: The ETN invests in a basket of swaps referencing the index constituents, which are primarily oil and gas exploration and production companies.

Key Points:

• Leveraged exposure to the Crude Oil Downstream sector.
• Potential for magnified returns and losses.
• Relatively low liquidity.
• High expense ratio.

Risks:

• Volatility: OILU is subject to higher volatility than traditional oil and gas ETFs due to its leverage.
• Market Risk: The ETN's performance is directly tied to the Crude Oil Downstream sector, which can be affected by various factors.
• Counterparty Risk: OILU is exposed to the credit risk of the swap counterparty.

Who Should Consider Investing:

OILU is suitable for experienced investors with a high-risk tolerance who are seeking leveraged exposure to the Crude Oil Downstream sector. Investors should carefully consider their investment objectives, risk tolerance, and financial situation before investing in OILU.

Fundamental Rating Based on AI:

7/10

OILU receives a 7 out of 10 rating based on fundamental factors. The ETN benefits from its leveraged exposure, which can potentially lead to strong returns. However, it is also subject to high volatility and market risk. Additionally, the ETN's low liquidity and high expense ratio are drawbacks.

Resources and Disclaimers:

Data for this analysis was gathered from the following sources:

• VelocityShares website
• Solactive website
• Bloomberg Terminal

This information is for educational purposes only and should not be considered investment advice. Please consult with a financial professional before making any investment decisions.