US-based Sustainable Wealth Management, an index provider specialising in the North American energy sector, has launched the Sustainable North American Oil Sands ETF (SNDS). The fund is the first pure-play ETF with exposure to Canada’s massive oil sands reserves.

Sustainable Wealth Management has rolled out the Sustainable North American Oil Sands ETF (SNDS), the first pure-play ETF with exposure to Canada's massive oil sands reserves (Alberta oil sands pictured).

SNDS invests in domestic and international companies that have North American oil sands operations ranging from production to equipment to pipelines and storage. The diversified portfolio of energy companies positions SNDS to potentially capitalise on the continued growth of the world’s largest known oil reserve outside of OPEC.

“The Canadian oil sands represent the majority of proven oil reserves outside of OPEC nations; the sands are the top supplier of crude oil to the US and are rapidly expanding production capacity over the next decade. Companies invested in the development of Canada’s oil sands stand to be key beneficiaries of these trends,” explains Derek Gates, CFA, founder of Sustainable Wealth Management, the index provider for SNDS. “SNDS is designed to give investors global energy sector exposure with growth prospects and potential for an above average investment yield.”

The fund tracks the Sustainable North American Oil Sands Index, developed by Sustainable Wealth Management. The index uses equal-weighted exposure to provide less concentrated exposure to the largest companies and more meaningful exposure to companies with growth prospects.

The number of constituents is expected to range between 25 and 40 and, according to the company’s FAQs, there will be 31 constituents in the index when SNDS is launched. As of 31 May, 2012, the index had a 3.15% dividend yield, while as of 25 May, 2012, the average price-to-earnings ratio was 15.7 and the average market capitalisation was $50.4 billion. Holdings in the Sustainable North American Oil Sands Index include names such as Canadian Natural Resources, Cenovus Energy, Chevron, Imperial Oil, Ivanhoe Energy, Marathon, Statoil and Suncor Energy.

The fund has been listed on the NYSE Arca and comes with an annual management fee of 0.50%.

While SNDS is the first ETF to offer targeted exposure to the oil sands industry, investors have been able to gain exposure to the wider unconventional oil and gas industry via the NYSE-listed Market Vectors Unconventional Oil & Gas ETF (FRAK). Unconventional oil and gas operations include efforts in coal bed methane, coal seam gas, shale oil, shale gas, tight natural gas, tight oil and oil sands.