The ongoing war between Israel and Iran has led to a significant spike in oil prices, which has severely impacted a leveraged inverse exchange-traded fund (ETF) managed by Israeli asset manager Kesem. The “Kesem ETF Leveraged Short Bloomberg Brent Crude Futures x2 Monthly” has seen its net asset value dip below zero due to soaring Brent crude prices, which jumped from about $83 per barrel to approximately $104 amid reports of Israeli airstrikes on Iranian oil facilities. This surge in oil prices follows the closure of the Strait of Hormuz, a critical oil shipping route, further exacerbating market volatility and raising concerns about global supply disruptions, given Iran’s status as a major oil exporter.
Kesem: Kesem Mutual Funds is a leading Israeli asset manager specializing in mutual funds, ETFs, and money-market funds, operating under the Kesem brand. It is managed by Avner Haddad and forms part of the Phoenix Group’s investment offerings. The firm recently halted trading in its leveraged inverse Brent crude ETF after oil prices surged due to the Israel-Iran war, causing the fund’s net asset value to turn negative.
Avner Haddad: Avner Haddad is the CEO of Phoenix Investment House, which manages Kesem Mutual Funds. He has led strategic growth initiatives, including acquisitions to expand the group’s mutual fund portfolio. Under his leadership, Kesem addressed the negative net asset value issue in its leveraged short oil ETF triggered by the Israel-Iran conflict.
Phoenix Group: Phoenix Holdings, referred to as the Phoenix Group, is a major Israeli financial services provider encompassing insurance, pensions, and asset management. It owns Kesem Mutual Funds, which handles mutual funds and ETFs including oil commodity products. The group’s asset management arm faced an unusual situation with Kesem’s short oil ETF amid the sharp oil rally from Middle East geopolitical tensions.
Kesem ETF (4D) Bloomberg Brent Crude Futures: This ETF provides direct long exposure to the Bloomberg Brent Crude Futures index via futures contracts. It tracks oil price movements for investors seeking commodity upside. The fund benefited from the recent surge in Brent prices amid the Israel-Iran war and related supply concerns.
Kesem ETF (4A) Bloomberg Brent Crude Futures Currency-Hedged: This ETF offers currency-hedged long exposure to Bloomberg Brent Crude Futures, protecting Israeli investors from USD-ILS fluctuations. It follows oil price trends adjusted for exchange rates. It gained from elevated oil prices following the escalation in the Middle East conflict.
Kesem ETF Leveraged Short Bloomberg Brent Crude Futures x2 Monthly: This passive ETF is designed to deliver twice the inverse monthly return of the Bloomberg Brent Crude Futures index through short futures positions. It targets investors betting on declining oil prices with leveraged exposure. The fund’s net asset value fell below zero due to the oil price spike from the war between Israel and Iran, leading to a trading suspension.
Oil Supply Risks: Damage to Iran’s oil infrastructure from airstrikes threatens global supply chains, as Iran remains a key exporter despite sanctions.
Geopolitical Escalation: Israeli strikes targeted Iranian oil facilities, including sites in Tehran, amid the ongoing war, raising fears of disrupted global energy supplies.
Strait of Hormuz Disruption: The conflict prompted the closure of the Strait of Hormuz, a vital chokepoint for a significant portion of world oil shipments, intensifying market volatility.
Source: ynetnews
