The BetaShares Crude Oil Index ETF (ASX: OOO) has been attracting a lot of investor interest in recent days. Not for its pricing performance mind you. This exchange traded fund (ETF) hasn’t done much, pricing wise, since early March. That’s when it reached a 52-week high of $6.58 a unit. Today OOO units are down just over 7% from that high. And even so, the ETF is still up 38% over the past six months. And a rewarding 66.5% over the past 12 months.
What’s more, these numbers don’t include the hefty distributions that the fund has made. Including these payouts, the fund has returned 74% for the six months to 30 April, and 123% for the 12 months to the same date.
What is the BetaShares Crude Oil Index ETF?
This ETF is a fund designed to track the performance of an index that provides exposure to crude oil futures contracts. In other words, it’s designed to reflect movements in the crude oil price.
The BetaShares Crude Oil ETF attracted a lot of interest last year amid the massive disruption to the oil market. The rapid onset of the COVID-19 pandemic saw a massive glut in the global oil supply. That’s what happens when almost everyone stops driving to work and flying on planes over just a few weeks. It might seem like a distant memory now, but oil futures for West Texas Intermediate (WTI) oil briefly went into the negative in April 2020 for the first time in history. This prompted enormous interest in the BetaShares ETF at the time. This interest might have proved lucrative for a number of investors, seeing as the fund’s units rose around 123% between 24 April 2020 and 23 April 2021.
But where does it stand today? Spot oil prices have certainly recovered. WTI crude was trading at US$35 a barrel this time a year ago. Today, it’s at US$66.70, roughly on par with late 2018 levels.
ETF distributions go turbo
Rather than movements in the crude oil price, interest in this ETF might instead be coalescing around the fund’s new distribution policy. About a month ago, BetaShares announced that the Crude Oil Index ETF would be making monthly distributions for the remainder of the financial year. And, why?
Here’s what the company said:
The prices of WTI crude oil futures have increased significantly over the course of the financial year to date. As a result, as at the date of this announcement, the Fund has realised substantial gains, which would be required to be distributed by the 30 June 2021 financial year end. The Fund therefore intends to make monthly distributions for the remainder of the financial year – as at the end of April, May and June 2021.
On Friday afternoon last week, the fund made another announcement. This one detailed that the ETF’s next distribution would be paid out on 17 June, with an ex-distribution date of 2 June. As flagged above, this fund’s distribution payments have formed a large component of its overall returns. The monthly payment of 34.14 cents per unit that unitholders received on 18 May for April is alone worth a yield of 5.63% on current pricing. Annualised, that would be a staggering 62%.
According to BetaShares, we are expecting its next distribution amount sometime today. No wonder investors are talking about the BetaShares Crude Oil ETF.