ProShares Launches New Crude Oil ETF, Without Need for K-1 Forms

September 28, 2016 by Jon C. Ogg

They say that there is an exchange traded fund strategy for just about every market and index that you can imagine. Now the ProShares ETF group has launched the ProShares K-1 Free Crude Oil Strategy ETF (OILK). This might not seem like very much, but it may matter when it comes to taxes.

The ETF launch is calling the OILK ETF the only crude oil ETF that is not a commodities partnership. Why this matters is that it does not deliver K-1 tax forms to shareholders.

ProShares also indicated that the OILK ETF is registered under the Investment Company Act of 1940. Other crude oil ETFs are commodities partnerships. That means that the ETF will provide shareholder tax reporting information on 1099 forms rather than the K-1 tax forms issued by partnerships.

OILK seeks to provide total return by providing exposure to the West Texas Intermediate crude oil futures market in an actively managed ETF. The fund’s strategy seeks actively manage the rolling of crude oil futures contracts, in an effort to act better around the futures roll dates around expirations.

This effort of actively managing roll dates will attempt to mitigate losses from contango — when new contracts are more expensive than expiring contracts. It also seeks to help the fund benefit from backwardation, which is when new contracts are less expensive than expiring ones.

Michael L. Sapir, co-founder and CEO of ProShares, said:

Many investors want to invest in crude oil with the convenience of an ETF, but all other crude oil ETFs involve complicated tax reporting. OILK is the only U.S. ETF that lets investors get crude oil exposure but skip the K-1 tax form.

I'm interested in the Newsletter