An Oklahoma City securities firm plans to launch an exchange traded fund made up exclusively of stocks issued by state-based publicly traded companies.
The Capital West Oklahoma Index Fund, expected to launch in next few months, would contain stocks from Oklahoma companies and likely trade under the ticker symbol "OKIF,” said Keith Geary, president of Capital West Securities.
An exchange traded fund represents a basket of stocks like a mutual fund, but trades like a stock on an exchange.
Some state-based foundations already have expressed interest in investing in such a fund, Geary said. The fund would need to gather about $10 million in holdings to be successful, Geary said.
The firm is compiling a five-year record of how such a fund would have performed, and working with consultants to develop a registration for the fund.
There are nearly 50 Oklahoma companies publicly traded on the New York Stock Exchange, Nasdaq Stock Exchange or the American Stock Exchange. Eighteen of those corporations have a market capitalization — the value of all the company's common stock — of more than $1 billion.
Initially the fund probably will be limited to a total investment in any one company of no more than 5 percent, Geary said.
Investors in the fund would have about two-thirds of their money in energy companies, reflecting the state's heavy tilt in that sector, Geary said. Of the 10 largest public corporations in the state, nine are energy companies.
Record-setting energy prices in recent years have produced strong returns for energy investors, said Bob Rader, Capital West senior vice president.
"We got enough good companies here in Oklahoma to do it,” Rader said.
Capital West hopes the Oklahoma Index Fund will trade on an exchange like the American Stock Exchange, which lists more than 200 exchange traded funds, Rader said.
Carl Gibson, an Oklahoma venture capitalist, said Oklahoma investors are ready for a state-based stock fund.
"It seems to be there's a huge void in there where people can invest in a basket of Oklahoma stocks,” Gibson said. "It's absolutely needed.”
Gibson, a former commercial banker and chief operating officer of local biotech company inoveon, said there are few geographically organized exchange traded funds.
"This is pioneering,” Gibson said.
Geary, who plans to chair a committee to manage the fund, envisions a group that would include Oklahoma corporate executives, business school faculty and even students from state universities to offer counsel on how to rebalance the fund.
"We intend to engage lots of different folks across the state to help manage the fund,” Geary said.
The fund will benefit by continued strong performance of local companies, and should contribute to those companies' ability to perform, Geary said.
"Our fund will constantly be buying shares of Oklahoma stock,” he said. "I hope the companies do well and the folks in Oklahoma who choose to buy do well. It's just a wonderful story.”
Economic conditions make this an opportune time to launch such a fund, Geary said. If the Oklahoma Index Fund is successful, it also could draw money from out-of-state investors, he said.
"I feel we're going to do just fine this year, especially with oil hanging around $100 a barrel,” Geary said.
"It's going to be fun. A year from now we ought to be able to look back and see an increased economic profile for Oklahoma.”
