SOURCE: AccuShares Investment Management

AccuShares Investment Management

June 28, 2016 10:48 ET

AccuShares Introduces New ETF for Investing in Oil

OILU and OILD Offer Lowest Annual Expense Ratio of Any Crude Oil Exchange-Traded Product (0.29 Percent) and No K-1's; New Fund Addresses Issues With Existing Oil ETFs, Including Daily Rebalancing, Cost of Using Futures and Derivatives in a Portfolio, Transparency

STAMFORD, CT--(Marketwired - June 28, 2016) - AccuShares, an innovative sponsor of exchange-traded products, is introducing a new exchange-traded fund (ETF) designed to provide a better way for investors to capture the up and down opportunities in crude oil pricing and market volatility.

The fund's two share classes -- the AccuShares S&P GSCI Crude Oil Excess Return Up Shares (OILU) and the AccuShares S&P GSCI Crude Oil Excess Return Down Shares (OILD) -- address known shortcomings with existing exchange-traded products in the oil market. Benefits to investors include:

  • Lowest Annual Expense Ratio of any Crude Oil Exchange Traded Product:
    0.29% represents the lowest all-in expense ratio of any unleveraged crude oil ETP in the market (as of June 28, 2016)
  • Inverse Exposure - No Daily Rebalancing Impact:
    Because of the point-to-point measurement period, OILD is not subject to the daily rebalance drawbacks of other inverse ETPs.
  • No K-1's:
    Unlike funds that transact in futures contracts and issue K-1's, tax reporting is through Form 1099.
  • No Direct Futures Trading Cost:
    Because the AccuShares Funds hold only cash and cash equivalents, there are no direct trading costs of managing futures positions.
  • No Margin Account for Inverse Exposure:
    OILD provides an inverse exposure to crude oil in a fully funded package, which means investors do not need to resort to shorting crude oil linked securities.
  • No Swaps or Other Derivatives:
    Due to AccuShares paired share design, the fund only holds cash and cash equivalents so there is no need to enter into derivative transactions in order to gain crude oil futures price exposure.

"Billions of dollars have been invested in oil exchange-traded products (ETPs) over the past few years, but investors have often found themselves frustrated by the cost and inefficiency of the products available to gain exposure to this market," said Jack Fonss, chief executive officer and co-founder at AccuShares. "Our innovative structure allows us to bring to market crude oil linked securities that are not only cost effective, but provide returns that are not subjected to the impact of a portfolio managers trading of the underlying securities and their ability to replicate the Underlying Index," he said.

OILU and OILD are designed to track changes in the S&P GSCI Crude Oil Index Excess Return (the "Underlying Index") on a monthly basis. The funds are intended for investors who want a cost-effective, targeted, and transparent exposure to the price of light, sweet, West Texas Intermediate (WTI) crude oil as represented by the index. Investors may choose Up or Down shares based on their individual opinion of the future direction of the underlying index.

"Daily rebalancing has been a key concern with leveraged and inverse ETPs, as it can result in what we describe as 'non-intuitive returns' -- returns that over relatively short periods of time deviate from what investors see in the performance of the underlying commodity, in this case oil," said Bob Rokose, chief financial officer at AccuShares. "This is unavoidable with the current product structures. Our technology solves for this."

Rokose noted that in addition to its own funds, AccuShares is exploring the possibility of licensing its technologies to other financial services companies for applications in additional investment products.

"We are excited to continue our valued relationship with AccuShares and to be the listing venue for their first two funds to launch this year," said Jeff McCarthy, Vice President and Head of ETP Listings at Nasdaq. "Last year, we helped AccuShares hit a milestone with the listing of their very first products -- VXUP and VXDN -- and we look forward to partnering on new and innovative products in the future."

"We believe we're in the early stages of a new era of innovation in the ETF industry. Our goal is to use technology to give investors the ability to act on directional views relative to a broad-based market in an efficient and low cost way. We plan to continue to broaden our own product family, and will make our technology available to others as well," Rokose said.

NOTE: the AccuShares funds are intended for investors who actively manage their fund investments on a regular basis. They are not intended as buy and hold vehicles.

About AccuShares

Founded in 2011, AccuShares Investment Management, LLC, (www.accushares.com) develops and sponsors innovative exchange traded funds (ETFs) in key alternative asset classes, including oil and volatility. The company holds a series of technology patents that provide the basis for a more institutional approach to constructing index-based products, enhancing tracking accuracy and transparency while reducing fund costs.

The Fund is very complex and involves a significant degree of risk; therefore, it is not suitable for all investors. The Fund Shares are only appropriate for short term holding periods.

Exposure to the expected price movements of crude oil futures involves a significant degree of risk and may not be appropriate for all investors. Moreover, shares of the fund are intended for sophisticated, professional and institutional investors.

Unlike other exchange traded products, the fund will engage principally in cash distributions and potentially paired share distributions to deliver to the shareholders the economic exposure to the fund's Underlying Index. Such distributions may not represent any income or gains on the fund's eligible assets and may represent a return of shareholder's capital. Each fund will issue its shares in offsetting pairs, where one constituent of the pair is positively linked to the fund's underlying index ("Up Shares") and the other constituent is negatively linked to the fund's underlying index ("Down Shares"). Therefore, the fund will only issue, distribute, maintain and redeem equal quantities of Up and Down shares at all times.

Key Risk Factors:
The Funds are not intended to be used as long-term passive investment vehicles and should be used by investors who understand the risks of the volatility market. By purchasing the Up Shares, investors should have an expectation that the Underlying Index will increase during the period between Distribution Dates. If the Underlying Index decreases during the time between Distribution Dates, investors in the Up Shares will experience a significant loss and could lose their entire investment. The Funds are not appropriate for you if you do not intend to actively monitor and manage your holdings in the Funds before and immediately following each Fund distribution date.

Investing in the Fund involves substantial risk and high volatility, including possible loss of entire principal. Receipt of distributions of cash or shares will reduce an investor's opportunity for gains in subsequent periods. Special Distributions will alter the timing of distributions to investors and reduce an investor's opportunity for gains in subsequent periods. A Corrective Distribution will eliminate an investor's opportunity for gains relating to the Underlying Index if an investor fails to rebalance his/her investments. Net income distributions may not occur.

Decreases in Class Values per Share from distributions and/or net losses may reduce Class Values per Share leading to an adverse effect on the liquidity of the market for the Fund's Shares and may deplete the Fund's assets. Additionally, a less liquid market for the fund's shares would increase the difficulty for investors seeking to acquire or sell fund shares at any price. Moreover, a significant decline in the fund's class values may cause the sponsor to terminate the fund if its continued operation would be uneconomical.

Disclosures:

AccuShares Trust I (formally AccuShares Commodity Trust I) is a Delaware statutory trust organized by AccuShares Management LLC, the trust's sponsor, into separate Fund series. Neither the Fund nor the Trust is an investment company under the Investment Company Act of 1940 or is subject to regulation under the Commodities Exchange Act or by the Commodity Futures Trading Commission and investors in the Fund are not afforded protection under such laws and regulations. Each Fund's shares represent fractional undivided interests in and ownership of that Fund only. Each Fund will offer its shares on a continuous basis and be listed on the Nasdaq Stock Market.

Distributions and Exposure to Underlying Index:
Exposure to changes in an Underlying Index will be achieved through the allocation of the Fund's liquidation value to each of its share classes and the resulting distribution to Fund shareholders of cash or cash and paired Up and Down Shares on prescribed distribution dates. A Fund's Up Shares will be entitled to a distribution when the Fund's Underlying Index has increased as of specified dates ("Regular Distributions") or by 75% ("Special Distributions"). Similarly, a Fund's Down Shares will be entitled to a distribution when the Fund's Underlying Index has decreased as of specified dates ("Regular Distributions") or by 75% ("Special Distributions"). Any Regular or Special Distribution will not take into account any index change of more than 90%, in either direction since the previous distribution date. Regular and Special Distributions are expected to be made principally in cash, though the sponsor reserves the right to make all or any part of any such distribution in paired shares, especially where further cash distributions would have an adverse effect on the liquidity of the market for the Fund's shares. After the first six months of Fund share trading, such distributions will be made in paired shares if Fund assets are $25 million or less.
Investors who receive distributions in the form of paired shares should determine whether the distributed shares have altered the intended exposure. In the event of a paired share distribution, shares will be received that provide the opposite exposure, and as a result, an investor might consider selling the unwanted shares and purchasing the desired share class.

Sales and purchases of shares to maintain a desired exposure are subject to regular commissions and transaction costs.

The share class having an adverse experience from Underlying Index changes will receive no Regular or Special Distribution and will experience dilution in value caused by the distribution to the opposing share class. Please see the prospectus for other factors that could trigger a distribution of paired shares instead of cash.

Corrective distributions of shares ("Corrective Distributions") may occur if the Fund's share classes' exchange trading prices deviate persistently from the value per share representing their share class' relative portion of the Fund's liquidation value ("Class Value per Share"). See "Investment Objectives," "Distributions and Distribution Dates," and "Description of the Shares & Certain Terms of the Trust Agreement."

Eligible Investments:
Each Fund will hold only cash, short-dated U.S. Treasuries or eligible repurchases agreements collateralized by U.S. Treasuries. The Fund will not invest in commodities, futures, swaps, or other derivatives. The Fund does not directly invest in the index, or in the securities it tracks.

Redemptions by Authorized Participants:
Fund Shares are not individually redeemable and will be issued and redeemed at their Class Value per Share only through certain authorized broker dealers in blocks of Shares called creation units, consisting of 25,000 Up Shares and 25,000 Down Shares.

Authorized participants will pay a transaction fee of $600 per order plus 0.005% of the aggregate order value in connection with each order for the creation or redemption of creation units.

All other investors may only buy or sell a Fund's shares in the secondary market at current market prices and may incur fees or brokerage commissions on their transactions. A Fund's Up and Down Shares will trade separately.

Secondary Market Purchases:
All other investors may only buy or sell a Fund's shares in the secondary market at current prices and may incur fees or brokerage commissions on their transactions. A Fund's Up and Down Shares will trade separately.

Investor Reassessment:
The Funds have been designed to be utilized by investors who are prepared to reassess their holding of the shares at least as frequently as each Distribution Date.

Investors in a Fund who wish to maintain a maximum exposure, a targeted absolute exposure, or a targeted relative exposure to such Fund's Underlying Index over multiple Distribution Dates should reassess their positions following all cash, share and Net Income Distributions, and all Fund resets relating to the Share Index Factors.

The Funds will not compound investor gains or otherwise rebalance investor positions to maximize investor exposure.

The Funds are designed to make Regular Distributions of cash and in some cases shares to facilitate regular distribution of investor gains and to promote a deliberate and regular reassessment by investors of their investment in the Funds.

Investors who hold shares over one or more consecutive Distribution Dates without reassessment of their Fund share portfolio may experience decreased exposure to the Fund's Underlying Index as well as a reduced opportunity for gain and loss.

Class Value per Share:
As the funds make Regular and Special Distributions, in cash or in paired shares, the Class Value per Share will decline over time.

The fund anticipates making periodic reverse share splits in order to maintain Nasdaq Stock Market listing requirements. Reverse Splits are expected to occur in the event of a Special Distribution.

Material should be preceded or accompanied by a prospectus, downloaded here.

Disclaimers:
The "The S&P GSCI® Crude Oil" is a product of S&P Dow Jones Indices LLC or its affiliates ("SPDJI") and, and has been licensed for use by AccuShares Management LLC. Standard & Poor's® and S&P® are registered trademarks of Standard & Poor's Financial Services LLC ("S&P"); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC ("Dow Jones"); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by AccuShares Management LLC. AccuShares Crude Oil Fund is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P GSCI Crude Oil.

Foreside Fund Services, LLC; Marketing Agent

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