When you add rising oil prices to leveraged exchange-traded products, it creates a combination that has been combusting with returns for investors thus far this year. As such, leveraged oil plays have had investors gushing as oil analysts are predicting that prices could even top the $100 level by year’s end.
“We have argued recently that reaching the $100 market would be a tall order. We still maintain this view but sometimes it makes more sense to put a time rather than a price limit on a rally,” PVM Oil Associates strategist Tamas Varga said. “About the end of November, we will have a good idea as how many barrels will be lost due to the launch of the second round of the Iranian sanctions. By that time all the bullish news will be in the market.”
If oil prices indeed reach the century price level and beyond, the list below of the best performing exchange-traded products year-to-date could change little by the end of the year and possibly beyond that.
1. United States 3x Oil (NYSEArca: USOU): 111.93%YTD
USOU seeks the daily changes in percentage terms of its shares’ per share NAV to reflect three times the daily change in percentage terms of the price of a specified short-term futures contract on light, sweet crude oil. USCF will endeavor to have the notional value of the fund’s aggregate exposure to the Benchmark Oil Futures Contract at the close of each trading day approximately equal to 300% of the fund’s NAV. The Benchmark Oil Futures Contract is the futures contract on light, sweet crude oil as traded on the NYMEX, traded under the trading symbol “CL.”
2. VelocityShares 3x Lng Crude Oil ETN New (NYSEArca: UWT): 101.31%YTD
UWT seeks to replicate three times of the S&P GSCI® Crude Oil Index ER. The index tracks a hypothetical position in the nearest-to-expiration NYMEX light sweet crude oil futures contract, which is rolled each month into the futures contract expiring in the next month. The value of the index fluctuates with changes in the price of the relevant NYMEX light sweet crude oil futures contracts.
3. UBS ETRACS ProShares Dly 3x Lng Crud ETN (NYSEArca: WTIU): 99.41% YTD
With WTIU, the 3X long securities provide a daily long leveraged exposure to the performance of the Bloomberg WTI Crude Oil Subindex ERSM. The index is designed to measure the return from a rolling long position in WTI crude oil futures contracts that trade on major U.S. exchanges.
4. ProShares UltraPro 3x Crude Oil ETF (NYSEArca: OILU): 96.19%YTD
OILU seeks to return a multiple (3x) of the performance of the Bloomberg WTI Crude Oil Subindex for a single day. The fund seeks to meet its investment objective by investing, under normal market conditions, in futures contracts for WTI sweet, light crude oil listed on the NYMEX, ICE Futures U.S. or other U.S. exchanges and listed options on such contracts.
5. ProShares Ultra Bloomberg Crude Oil (NYSEArca: UCO): 64.72% YTD
UCO seeks to provide daily investment results (before fees and expenses) that correspond to twice the daily performance of the Bloomberg WTI Crude Oil SubindexSM. The “Ultra” funds seek results for a single day that match (before fees and expenses) two times (2x) the daily performance of a benchmark. It does not seek to achieve their stated objective over a period greater than a single day. The Bloomberg WTI Crude Oil SubindexSM is designed to track crude oil futures prices.
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