Profit off rising oil with an ETN

Simon BrownETF Blog, Latest

Back in 2020 the Standard Bank oil Exchange Traded Note (ETN) expired and they issued a new one in 2021 and with Brent as volatile as ever there is opportunity here for profit for those timing their entry right.

Key drivers for oil right now are the war in the Middle East and fears it could spread, especially bringing increased sanctions on Iran. The Russia/Ukraine war also still rages on but sanctions against Russian oil seem to be having very little effect.

Add to this is OPEC+ production cuts, mostly from Saudi Arabia who want a higher oil price. BUt after a spike in the mid $90’s Brent has slipped back to the low $80’s and could move down to the low $70’s which would be a great entry point.

Locally investors have limited options to get exposure to a rising oil price with the only stock being Sasol (JSE code: SOL), but Sasol has been ignoring the rand/oil price. This makes this ETN well worth a look for those expecting a higher oil price.

This ETN tracks the Brent oil price (chart below) in Rands with an allocation factor of 100, so every 100 ETNs equals a barrel of oil.

The total expense ratio is 0.35% which is decent and while ETNs always have an expiry date, in this case, is 2041 so not a worry any time soon.

The sad news is because it is an ETN you can’t buy it within a tax-free account, only in a discretionary investing account.

Simon Brown

ETN name Standard Bank Oil ETN
ETN issuer Standard Bank
Issue date 13 July 2021
Total investment cost 0.35%
ETN Benchmark Brent oil in Rands
Tax-free savings account NO
ETN major holdings Brent oil
Market cap R1.12billion
Performance 1 year +1.5%
Performance since listing +112.6%
Dividend yield None

ETF blog

At Just One Lap, we are big fans of passive investment using ETFs. In this weekly blog, we discuss ETFs on the local market and the factors you need to consider when choosing an ETF. If you have wondered how one ETF differs from another, this is where you can find out. We explain which index each ETF tracks, what type of portfolio could benefit from holding each ETF, and how the costs will affect your bottom line.