WCAT: Wildcatter ETF Arrives

January 21, 2010 by  
Filed under Commentary, ETF IPOs (New ETFs), ETFs

The Jefferies | TR/J CRB Wildcatters Exploration & Production Equity ETF (WCAT) began trading yesterday (January 20, 2010).  WCAT, the latest ETF from Jefferies Asset Management, provides exposure to small-cap and mid-cap American or Canadian companies that are principally engaged in energy exploration and production.

Stocks must have a market capitalization between USD 200 million and USD 2 billion to be eligible for inclusion in the index.  The underlying index has a weighting of 44% in midcap stocks and 56% in small caps.  The country allocation is about 68% US and 32% Canada.

The fund currently has 55 holdings with the top 10 being Forest Oil (FST) 5.8%, Encore Acquisition (EAC) 5.1%, St. Mary Land & Exploration (SM) 4.7%, Atlas Energy (ATLS) 4.6%, Progress Energy Resources (PRQ.TO) 4.0%, Quicksilver Resources (KWK) 3.7%, Comstock Resources (CRK) 3.7%, Arena Resources (ARD) 3.2%, Sandridge Energy (SD) 3.0%, and Bill Barrett Corp (BBG) 3.0% (complete list of holdings).

The WCAT overview page shows an expense ratio of 0.65%.  Currently three other ETFs cover the exploration & production sector:  iShares DJ US Oil & Gas Exploration & Production (IEO) with a 0.48% expense ratio (IEO overview), SPDR S&P Oil & Gas Exploration & Production (XOP) with a 0.35% expense ratio (XOP overview), and PowerShares Dynamic Energy Exploration & Production (PXE) with a 0.60% expense ratio (PXE overview).

The new Wildcatters ETF is unique in its mid and small-cap focus.  For example, more than 80% of the iShares IEO is invested in about two dozen stocks that have larger capitalizations than any of the stocks in WCAT.  The XOP SPDR takes a different approach, equally weighting 35 large and mid-cap stocks in this sector, but it still contains a lot of names not found in WCAT.  PowerShares PXE holds 30 stocks that change on a number of factors that currently results in about 60% of PXE holding mid and small-cap names.

As Jefferies adds new literature about WCAT to their website, it will be found here.

Reviews of all new ETFs can be found here.

Disclosure covering writer, editor, publisher, and affiliates: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned.  No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.

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