Soon Indian investors will have an investment vehicle where one can profit from rising oil prices. Benchmark Mutual Fund has filed an offer document with SEBI for first fund based on oil prices -- Oil Benchmark Exchange Traded Scheme (Oil BeES), an open ended exchange Listed scheme.
The fund aims to provide returns close to the returns provided by crude oil by investing in units of overseas mutual fund schemes and FTFs investing in securities and instruments linked to crude oil whose returns are linked to crude Oil. The fund can have upto 10 per cent of its assets in debt and money market instruments.
United States Oil (USO), an oil ETF is up 50.03% over the past 6-months and up 114.45% over the past 1-year in dollar terms as on June 30, 2008. This fund reflect the performance of the spot price of West Texas Intermediate (WTI) light, sweet crude oil and invests in futures contracts for WTI light, sweet crude oil, other types of crude oil, heating oil, gasoline, natural gas and other petroleum based-fuels that are traded on exchanges.
Oil BeES benchmark will be international prices of crude oil price in rupees terms. The minimum investment in the fund can be Rs 10000. In the initial offer period the fund will charge an entry load of 2.25 per cent. Subsequently, investors can buy an ETF like a share through a broker on the market. Hence, all investors must have a demat account to buy this fund.
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