Today the Oklahoma ETF began trading on NYSE Arca under the symbol OOK. This is the first state-based ETF. If ETF investors had been asked a year ago which state would be first to have its own ETF, I doubt that Oklahoma would have been a popular guess. The Oklahoma based sponsors have plans for a similar Texas fund. Both will feature a portfolio of companies headquartered in their respective states.
The new OOK ETF is dominated by energy stocks. The underlying index, the SPADE Oklahoma Index, has more than 72% of its constituents in exploration, drilling, pipeline and other energy-related stocks. This should not surprise anyone who has actually been to Oklahoma. Energy is big business there.
A look at individual company names reveals that OOK should actually have a fairly liquid portfolio. The top ten index constituents as of October 28, 2009 were:
Helmerich & Payne (HP) 7.9%
ONEOK Partners (OKS) 7.8%
Magellan Midstream Partners (MMP) 7.8%
Williams Companies (WMB) 7.4%
Continental Resources (CLR) 7.5%
Oneok Inc (OKE) 7.6%
Devon Energy (DVN) 7.3%
Chesapeake Energy (CHK) 6.8%
OGE Energy (OGE) 6.6%
BOK Financial Group (BOKF) 6.1%
For the most part these are well-known, highly traded energy stocks that happen to be based in Oklahoma. OOK will probably be regarded by traders as just another energy ETF. Of course, there are already plenty of energy ETFs that don’t restrict themselves to companies in particular states. This being the case, it is not clear what advantage OOK brings to the table. Maybe people in Oklahoma will buy it to express pride in their state. If I were an Oklahoma resident, I would be more interested in diversifying out of the sector that dominates my state than investing even more in it, but that’s just me.
The fund will charge a management fee of 0.65% plus additional expenses estimated to be 0.20%. The major assumptions (like assets under management) regarding the 0.2% estimate were not provided, so the stated 0.85% expense ratio could end up being higher since it is not capped.
You can find additional information at the OOK home page.