ETF Losses Reduced to Some Degree
The price of WTI crude for delivery in June dropped 24.6 percent and closed at US$12.78 per barrel on April 27. During the NYMEX trading session, the price fell more than 30 percent to dip below US$11 per barrel.
Meanwhile, KODEX WTI Crude Oil Futures (H) fell approximately 10 percent in the morning of April 28. The difference between the rates of decrease is because the management of the ETF was modified in advance.
Samsung Asset Management made an announcement on the modification on April 23, saying that full investment losses might occur in the event of a negative crude oil futures price. The company reduced the ratio of June delivery from approximately 80 percent to 30 percent or so and increased the ratio of July to September delivery. At present, the ratios are 37.12 percent, about 18 percent, about 17 percent, and about 8 percent, respectively. On April 27, the price of WTI crude for delivery in July, August and September fell 14 percent, 10 percent and 7 percent, respectively.
Earlier, the modification caused a lot of controversy. The company made the modification without any consent or prior notification, causing investors to complain. Besides, the ETF failed to reflect the recent rebound in June oil price due to the modification and the company provided no data on the indicative net asset value of the ETF after the modification. Under the circumstances, some investors are preparing to file a suit against Samsung Asset Management.