Lyxor keeps ETN momentum going with oil futures launch

Lyxor has listed two exchange-traded notes (ETNs) on Euronext in Paris, which give investors the option of taking either a long or short position on WTI oil futures. Tracking the SGI Smart WTI Long Invest and its inverse counterpart, the ETNs listed in early April following the fund provider's first foray into ETNs on the London Stock Exchange (LSE) in March, when it listed a product linked to the gold spot price (see feature, page 10).

"Lyxor ETNs trade intraday just like our ETFs on the exchange," says Claus Hein, London-based director at Lyxor. "We hope to launch more on the LSE soon." Investors can trade the notes directly in the market or through Lyxor's authorised participants, which include investment banks and broker dealers.

Like the gold note, both structures are collateralised with eurozone government bonds or S&P AAAf-rated government funds, which virtually eliminates counterparty risk, says Hein. The cost of the collateralisation fluctuates according to bond yields, so the changing annualised fee is published daily on Lyxor's website. Latest figures put the cost at around 72 basis points (bp), which the investor is charged in addition to the standard fees on the notes, which are 60bp and 70bp for the long and short versions respectively.