New Morgan Stanley Oil ETN Debuts Today

Morgan Stanley MS introduced the Morgan Stanley S&P 500 Crude Oil Linked ETN BARL today, a new ETN designed to give investors exposure to the S&P 500 index and an equal weighted combination of near-term NYMEX West Texas Intermediate Light Sweet Crude and ICE Brent Crude Oil futures contracts. With an annual tracking fee of 0.79%, a $100 investment in BARL gives investors $100 in exposure to the S&P 500 and $50 in exposure to both Brent crude and West Texas Intermediate. The index BARL tracks will be rebalanced monthly. The spread between the Brent and West Texas Intermediate contracts is currently near historically wide levels, an issue that is worth noting as it pertains to BARL since the ETN features exposure to both contracts. “Because Brent crude oil and West Texas Intermediate crude oil are different types of crude oil that trade on different exchanges and are produced in different geographic locations, the markets for ICE Brent Crude Oil futures and for NYMEX Crude Oil futures are not exactly the same. “Differences in delivery terms, producers, end-users, trading hours, refining and storage capacities and other factors may affect the trading of each Oil Futures contract in different ways, leading to differences in the size and frequency of movements in the price of each Oil Futures contract over a given period of,” Morgan Stanley said in BARL's prospectus.