As more retail investors access oil ETFs, new investors should understand the potential risks of trading futures-backed funds. Specifically, oil traders should be aware that USO tracks front-month WTI future contracts and the underlying oil market is currently in a state of contango. Consequently, USO could experience a negative roll yield when rolling a maturing futures contract. [Oil ETFs Loom Large in Futures Market]
Even with its April outflows, USO has added more than $1.6 billion in new assets this year. That comes after 2014 inflows to the fund of nearly $1.2 billion.
United States Oil Fund
ETF Trends editorial team contributed to this article.