There’s another entry in the category of energy commodities-focused exchange traded funds (ETFs), this one covering heating oil.
The United States Heating Oil Fund (UHN) holds futures contracts for the commodity, reports Murray Coleman for Index Universe. It’s made up of near-month contracts set to expire, except when the contract is within two weeks of expiration. In that case, it invests in the next month.
One difference in this fund is that it takes advantage of something called "crack spreads," which measure the difference between profit margins when a barrel of oil is first handled to when it enters its final incarnation as things like heating oil or gas for your vehicle. Crack spreads are at historically high levels, and Coleman says that heating oil spreads on the New York Mercantile Exchange are running as high as $22.50.
This new fund is just the latest to cover the white-hot energy sector. In February, the United States Gasoline Fund (UGA) was launched – the first of its kind. The provider of UHN and UGA, Victoria Bay, also offer the United States Oil Fund (USO), United States 12-Month Oil Fund (USL) and United States Natural Gas Fund (UNG).