A quick explanation:
- UCR: long-term price of oil
- DCR: long-term inverse of oil
- The sum of the two funds is always $40
That’s because the funds hold treasuries and cash. They’re issued in pairs to authorized participants, who are then free to trade them on the secondary market. The funds’ trustees have a "swap agreement" in that as the price of oil shifts, assets between the funds move accordingly. As an example, when the price of oil moves up by a dollar, one dollar is taken from the DCR trust and moved to the UCR trust.
Oil traded up more than 3% yesterday, once hitting $111.68. Yesterday, DCR was down 29.2%, while oil had been up only 3.12%, reports Bespoke Investment Group on Seeking Alpha.
What is going on?