CRAK: A New ETF Worth Looking At

(Continued from Prior Part)

According to Van Eck, crack spread, otherwise known as the difference between the price of crude oil and its refined products, is a common indicator of the potential profitability of the refining industry. Unlike other energy sector segments, oil refiners may benefit from lower oil prices if crack spreads remain attractive.

This would have a positive impact on the Market Vectors Oil Refiners ETF (CRAK), as the fund is concentrated on oil refining companies.

Van Eck estimates that expenses for CRAK will run $6.40 per $1,000 invested, or 0.64%, with a net expense ratio of 0.59%. Van Eck has agreed to cap expenses until May 1, 2017, in order to gain investors’ interest in the new ETF.

CRAK is a relatively new fund, and liquidity concerns should be considered given its smaller asset base and lack of trading volume to date. CRAK only has about $1.8 million in total assets. It has traded ~8,000 shares per day since launching in mid-August. CRAK’s low asset count and share volume mean the fund needs to prove itself to investors.

Market Vectors ETFs have been successful with two energy ETFs, the Market Vectors Oil Services ETF (OIH) and the Market Vectors Unconventional Oil & Gas ETF (FRAK). These successes could certainly help garner investor interest as well as asset count and share volume.

CRAK joins Van Eck Global’s family of energy-focused ETFs, which includes the Market Vectors Uranium & Nuclear Energy ETF (NLR), the Market Vectors Unconventional Oil & Gas ETF (FRAK), the Market Vectors Global Alternative Energy ETF (GEX), the Market Vectors Solar Energy ETF (KWT), the Market Vectors Coal ETF (KOL), and the Market Vectors Oil Services ETF (OIH).

CRAK’s basket meets a reasonable definition of pure-play refinery exposure in an investable wrapper. CRAK’s holdings in US top refiners include HollyFrontier (HSC), Western Refining (WNR) Marathon Petroleum (MPC), Phillips 66 (PSX), Tesoro (TSO), and Valero Energy (VLO). The Energy Select Sector SPDR ETF (XLE) has 28.12% holdings in the Oil & Gas Exploration & Production industry.

Browse this series on Market Realist:

• Part 1 - CRAK Offers Exposure to Crude Oil Refining Companies
• Part 2 - Robust Crack Spreads Guide Van Eck’s Holdings for CRAK
• Part 3 - CRAK Provides Broad Exposure to Developed and Emerging Markets