With crude oil prices on the move again this week amidst Iran’s threats to disrupt supply lines, we have the opportunity to highlight a segment of the exchange traded fund market that has experienced significant growth in 2011.
We highlighted the space back in early October as well. A number of oil-related funds launched in 2011 including CRUD (Teucrium WTI Crude Oil Fund), FOL (FactorShares 2X Oil Bull/S&P 500 Bear), OILZ (E-TRACS Oil Futures Contango ETN), OLEM (iPath Pure Beta Crude Oil) and TWTI (RBS Oil Trendpilot ETN).
USO (U.S. Oil Fund) remains the most popular fund in the group, holding approximately $1.6 billion in assets at the moment, but from a performance standpoint it has lagged others in the group.
DBO (PowerShares DB Oil) is up 3.05%, USL (U.S. 12 Month Oil) has rallied 2.78%, OLO (PowerShares DB Crude Oil Long ETN) has gained 2.29%, and OIL (iPath S&P GSCI Crude Oil ETN) is up 0.59% year to date versus USO’s gain of 0.15%.
Each fund mentioned here has a unique methodology in how they track (or fail to track depending on how the investor sees it) spot crude oil prices and are highly dependent on the specific futures contracts utilized as well as market dynamics in the oil futures market itself in terms of conditions of backwardation and/or contango. [Commodity ETFs: Understanding Contango]
Additionally, a case can be made amongst portfolio managers that the specific “type” of crude oil invested in deserves consideration as Brent has significantly outpaced WTI (West Texas Intermediate) crude oil year to date, with BNO (U.S. Brent Oil) rallying an impressive 21.25% year to date. [Brent Oil ETF Crushes WTI in 2011]
In any case, with spot oil prices rising sharply over the past 7 trading sessions and now with Iran running interference, the space remains in focus especially with other areas of the markets not seeing a ton of volatility nor trading volume at the moment heading into year’s end.
U.S. Brent Oil
For more information on Street One ETF research and ETF trade execution/liquidity services, contact pweisbruch@streetonefinancial.com.