New Oil ETF and a New ETF Provider
February 24th, 2011 at 6:00am by Tom Lydon
Just in time for skyrocketing oil prices, commodity exchange traded fund (ETF) provider Teucrium is out with another addition to its lineup.
The Teucrium WTI Crude Oil Fund (NYSEArca: CRUD), according to Index Universe, will own the closest to spot price June or December futures contract, which will be weighted at 35%. The next contract out will be owned in June or December at 30%. Finally, the last contract will be the December contract after the second contract and it will be weighted at 35%.
The timing of the launch is fortuitous: oil prices are now back above $100 a barrel as a result of the intensifying crisis spreading in the Middle East, which has disrupted production in Libya in particular. It’s the first time oil has been above $100 since October 2008.
In other news, a new ETF provider is hitting the scene today. FactorShares‘ new line of FactorShares Spread ETFs are designed to replicate spread trading, which helps investors get exposure to two market segments in one position.
FactorShares says the impetus behind the funds is to simplify the execution of a common strategy: going long in one area and short in another. The provider points out that it takes a lot of time to rebalance those positions, not to mention that getting that exposure requires two transactions to take two positions.
What’s more, in keeping with the price war trend, they’ll be sold commission-free through Interactive Brokers.
The provider cautions that these products, like other leveraged and inverse ETFs, are for sophisticated investors who understand them.
The first five products that begin trading today are:
- FactorShares 2x: S&P 500 Bull/TBond Bear (NYSEArca: FSE)
- FactorShares 2x: TBond Bull/S&P 500 Bear (NYSEArca: FSA)
- FactorShares 2x: S&P 500 Bull/USD Bear (NYSEArca: FSU)
- FactorShares 2x: Oil Bull/S&P 500 Bear (NYSEArca: FOL)
- FactorShares 2x: Gold Bull/S&P 500 Bear (NYSEArca: FSG)
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.