The sum of the two funds together is always $40 – one-third the price of a barrel of oil. When they initially were launched, the sum was $60, the then-price of a barrel. They found that much like investors balk at $100 oil, they weren’t too keen on spending $60, either. That led to a three-for-one split last October and each up and down became worth $20 apiece. That means the most UCR could ever be worth is $40, in which case, DCR would be worth $0.
If the fund were nearing the $0 mark, Masucci says they’d terminate the trust and give investors cash.
Further, because these funds are 1933 Act, they mature in 20 years. Since they were launched in 2006, by 2026, investors would get a return of capital the day prior to the fund’s maturity – assuming the price of oil stayed between $0 and $100.
For now, Masucci and Tull will see what the market demands. "If the market says ‘We like macros a lot,’ we’d issue an oil one that has a $100 value," Masucci says. He explains that the sum of the up/down would then be good for $0 to $200.
The ultimate idea behind the funds is to give investors access to areas that in the past were very difficult to get into, such as commodities, housing and economic indicators. The goal, Masucci says, is to "open a whole new asset class where one doesn’t exist now."