Texas Capital Launches Texas Oil ETF and Texas Small Cap ETF
Sponsored Content Investment>ETFs Texas Capital Launches Texas Oil ETF and Texas Small Cap ETF Texas Capital has launched two new ETFs, bringing additional opportunities to invest in Texas to your portfolio through exposure to oil and gas producers and Texas-headquartered small-capitalization companies. The Texas Capital Texas Oil Index ETF (NYSE Arca: OILT) launched late last year focusing on companies responsible for oil and gas production in the state of Texas. Unlike other funds focused on the exploration and production of oil and gas, the OILT ETF weights securities based on the production of oil and gas as reported by the Texas Railroad Commission, which drives investment in producers operating in the Permian Basin, Granite Wash and the Barnett, Eagle Ford and Haynesville/Bossier Shales.
West Texas Intermediate (WTI) is known for its high-quality grade of crude oil that is used as a global and national benchmark for oil commodity pricing. This global recognition is due to WTI’s suitability for refining gasoline and other high-demand products. Because Texas is the leading state for producing the oil ultimately traded as WTI, OILT presents a unique opportunity for investors as it is the only equity ETF that has exposure only to the companies that have been active in this region. In 2023, Texas crude oil output hit its highest level ever at 5.49 million barrels a day, which accounted for about 40% of the entirety of U.S. production of crude oil. We believe this oil production has the best geographic access to the US oil infrastructure as well as top global shipping ports located in South Texas.
OILT is comprised of 31 constituents as of December 31, 2023. Top names in the index included Diamondback Energy (FANG), ConocoPhillips (COP) and Pioneer Natural Resources Company (PXD). Companies in the index must be publicly traded and responsible for more than 0.1% of the annual state oil and gas production of Texas over the past 10 years, based on data published by the Texas Railroad Commission. See more on OILT here.
The second new ETF, the Texas Capital Texas Small Cap Equity Index ETF (Nasdaq: TXSS), focuses on the backbone of the Texas economy – small businesses. This new ETF recognizes the pivotal role small businesses play in the state’s economy, offering investors an opportunity to increase their investment exposure to the economic trends driving the Texas economy.
Similar to Texas Capital’s existing flagship fund, the Texas Capital Texas Equity Index (NYSE Arca: TXS), Texas Capital believes that companies headquartered in Texas may enjoy certain economic, regulatory, taxation, workforce and other benefits relative to companies headquartered in other states. Small capitalization companies may enjoy these benefits in greater proportion when compared to larger, more geographically diverse companies. The strong business environment in the state of Texas is demonstrated by, among other things, its infrastructure spending and resources, relatively low cost of conducting business, export data, and third-party rankings and recognitions.
The fund is sector GDP weighted and then market-capitalization weighted within each sector, providing diverse exposure to key business sectors including industrials, energy, consumer discretionary, healthcare and real estate. See more on TXSS here.
Disclosures:
Investors should carefully consider the investment objectives, risks and charges of the fund before investing. The prospectus contains this information and other information about the fund, and it should be read carefully before investing. Investors can obtain a copy of the prospectus by calling 844.TCB. ETFS (844.822.3837).
Investment and Market Risk. As with all investments, an investment in the Fund is subject to investment risk. Investors in the Fund could lose money, including the possible loss of the entire principal amount of an investment, over short or prolonged periods of time.
Index Tracking Risk. There is no guarantee that the Fund will achieve a high degree of correlation to the Index and therefore achieve its investment objective. The Fund may have difficulty achieving its investment objective due to fees, expenses (including rebalancing expenses), and other transaction costs related to the normal operation of the Fund. These costs that may be incurred by the Fund are not incurred by the Index, which may make it more difficult for the Fund to track the Index.
New Adviser Risk. The Adviser has not previously served as an adviser to a registered mutual fund or ETF. As a result, there is no long-term track record against which an investor may judge the Adviser and it is possible the Adviser may not achieve the Fund’s intended investment objective.
New Fund Risk. The Fund is new and does not have shares outstanding as of the date of this Prospectus. If the Fund does not grow large once it commences trading, it will be at greater risk than larger funds of wider bid-ask spreads for its shares, trading at a greater premium or discount to NAV, liquidation and/or a stop to trading. Any resulting liquidation of the Fund could cause the Fund to incur elevated transaction costs for the Fund and negative tax consequences for its shareholders.
Geographic Concentration Risk. Because the Fund and the Index will invest only in issuers headquartered in a particular geographic region, the Fund’s performance is expected to be closely tied to various factors such as social, financial, economic, and political conditions within that region. Events that negatively affect that region may cause the value of the Fund’s shares to decrease, in some cases significantly. As a result, the Fund may be more volatile than more geographically diverse funds.
Small Capitalization Companies Risk. Investments in securities of small-cap companies may be riskier, more volatile, and more vulnerable to economic, market and industry changes than investments in larger, more established companies. As a result, share price changes may be more sudden or erratic than the prices of other equity securities, especially over the short term. Small-cap companies often have less predictable earnings, more limited product lines, markets, distribution channels, or financial resources, and the management of such companies may be dependent on one or a few key people. The equity securities of small-cap companies are generally less liquid than the equity securities of larger companies.
Energy Sector Risk. Companies operating in the energy sector are subject to risks including, but not limited to, economic growth, worldwide demand, political instability in the regions that the companies operate, government regulation stipulating rates charged by utilities, interest rate sensitivity, oil price volatility, energy conservation, environmental policies, depletion of resources, and the cost of providing the specific utility services and other factors that they cannot control.
Oil and Gas Companies Risk. Oil and gas companies develop and produce crude oil and natural gas and provide drilling and other energy resources production and distribution related services. Stock prices for these types of companies are affected by supply and demand both for their specific product or service and for energy products in general. The price of oil and gas, exploration and production spending, government regulation, world events and economic conditions will likewise affect the performance of these companies. Correspondingly, securities of oil and gas companies are subject to swift price and supply fluctuations caused by events relating to international politics, energy conservation, the success of exploration projects, and tax and other governmental regulatory policies. Weak demand for the companies' products or services or for energy products and services in general, as well as negative developments in these and other areas, would adversely impact the performance of the Fund. Oil and gas exploration and production can be significantly affected by natural disasters as well as changes in exchange rates, interest rates, government regulation, world events and economic conditions. These companies also may be at risk for environmental damage claims.
Texas Capital Bank Wealth Management Services, Inc. d/b/a Texas Capital Bank Private Wealth Advisors (“PWA”), a wholly owned subsidiary of Texas Capital Bank serves as investment adviser to Texas Capital Funds Trust (a Delaware statutory trust formed in 2023 and registered as an open-end management investment company under the Investment Company Act of 1940) for its funds (the “Funds”) and is paid a fee for its services. Shares of the Funds are not deposits or obligations of, or guaranteed or endorsed by, Texas Capital Bank or its affiliates. The Funds are not insured by the FDIC or any other government agency. The Funds are distributed by Northern Lights Distributors, LLC, member FINRA/SIPC, which is not affiliated with Texas Capital Bank Private Wealth Advisors.
Not a Deposit. Not FDIC Insured. Not Guaranteed by the Bank. May Lose Value. Not Insured by any Federal Government Agency.
Distributed by Northern Lights Distributors, LLC, member FINRA/SIPC, which is not affiliated with Texas Capital Bank Private Wealth Advisors.
17934074-NLD-02/29/2024
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