New Oil ETF Coming
March 28th, 2006 by Grant in: Investing
I’ve been a big fan of the oil stocks for the last year, and I’ve made pretty decent money trading Chesapeake Energy (CHK) and Valero Energy (VLO). It is a pretty volatile market, so it’s not for the faint of heart, but long term, it depends on where you think oil prices are going.
I’m also a big fan of ETF’s, primarily those that look at an entire sector. It alleviates the risk of owning a single security and gambling on the fundamentals of the business structure. With all the corporate fraud going on these days, it’s tough to trust management. ETF’s virtually eliminate this risk by investing in a bunch of different companies in the same sector.
Now there’s an oil ETF coming in the next few weeks according to an article on MarketWatch.com. Unfortunately the article is naturally lacking details due to SEC restrictions, but it will be a good one to watch.
“The fund’s investment objective is for shares to reflect the performance of the spot price of West Texas Intermediate (WTI) light, sweet crude oil delivered to Cushing, Oklahoma, , minus expenses, according to the filing. It will invest in energy futures contracts, cash-settled options and other instruments to achieve the oil exposure, and will also hold short-term Treasuries.” - MarketWatch.com
The management fee’s be around 0.5% of the assets, which isn’t too out of line with other ETF’s.
I’ll keep an eye out for it, I believe it will be called the United States Oil Fund LP trading under the ticker ‘USO’.
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July 24th, 2006 at 12:28 pm
Looks like USO has tracked the crude oil prices fairly accurately in terms of percentage change. In my view, this is the easiest way for the individual to get into the oil market.
JC