Home
Print this page
Mail this page
- Overview of RMB's ETNs
- Products
- FAQs
- Investor information
- How to invest
- In the news
- Contact us
In the News
Rand Merchant Bank Launches Oil Exchange Traded Note
Rand Merchant Bank (RMB) has launched its first Exchange Traded Note (ETN), the RMB Oil ETN, which was listed on the JSE Limited on 8 December 2010.
The RMB Oil ETN offers investors exposure to the front month futures contract for light sweet crude oil listed and traded on the New York Mercantile Exchange (NYMEX). It offers investors an alternative to investing in an oil future or directly into an oil company. A single unit will give an investor exposure to 1 barrel of oil, making the product more accessible and easier than investing directly in a future (which trades at 1,000 barrels of oil).
Investor funds earn interest at US treasury bill rates on the full amount of the note. The RMB Oil ETN is listed and traded in Rands. The investor therefore gets a return based on the oil future, treasury bill rates and the USD/ ZAR exchange rate.
An investor fee of 75 basis points is deducted.
The RMB Oil ETN is listed and traded on the JSE Limited. Trades can be done daily in any size. The index value of the RMB Oil Index is published daily. RMB is the market maker so investors can buy or sell on the JSE through any broker (fees apply) while large volumes can be traded directly with RMB.
“ETNs have proved very popular globally and RMB’s industrial commodity ETNs are a first for South Africa, allowing investors direct exposure to some of the underlying commodities driving inflation.” says Bevan Jones, head of Energy and Metals at RMB. “ETNs have a low cost base, they are transparent, liquid and offer accessibility to a wide range of investments which may otherwise be unavailable to investors.”
The RMB Oil ETN will be followed by the launch of further RMB ETNs focusing on commodities and managed equities, as well as other asset classes.
Though ETNs are new to South Africa, their popularity has grown rapidly internationally with US ETN asset values, for example, increasing by 113% in the year to February 2010.
An ETN closely tracks the return of a benchmark index or strategy. ETNs are similar to Exchange Traded Funds except that the underlying pool of assets is owned by FirstRand, in the case of RMB ETNs, and not a segregated fund. An investor is therefore buying a commitment from FirstRand that it will pay out the cash value of the ETN on maturity.
