Short Oil ETF Launches
Source: http://www.indexuniverse.com/sections/newsinfocus/6602-short-oil-etf-launches.html?Itemid=3&utm_source=straightstocks.com&utm_medium=sidebar&utm_campaign=rssPosted on Thursday, September 24th, 2009 | In Exchange Traded Funds, Investing Lessons
United States Commodity Funds LLC has launched a new exchange-traded fund designed to provide short exposure to the crude oil market.
The United States Short Oil Fund (NYSEArca: DNO) aims to capture the inverse of the daily return of the front-month West Texas Intermediate crude oil futures contract, as traded on the New York Mercantile Exchange.
On a one-day basis, the fund should mirror the returns of the popular United States Crude Oil Fund (NYSEArca: USO). Over longer time frames, the returns may diverge due to compounding. (For more on the impact of compounding on returns, check here or here.)
DNO will charge 0.60% in annual expenses.
Unlike most leveraged and inverse products, DNO will not use swaps to achieve its exposure. Instead, it will take short positions in the actual underlying futures contracts.
DNO will compete directly with the PowerShares DB Crude Oil Short ETN (NYSEArca: SZO), a short oil exchange-traded note with $27 million in assets under management.
SZO differs from DNO in two ways. First, it tracks a slightly different index: DNO exclusively focuses on the front-month futures contract, while SZO sometimes owns out-month contracts instead. More importantly, while DNO compounds its returns on a daily basis, SZO compounds them on a monthly basis.
The difference between monthly and daily compounding may seem like a technicality, but for long-term holders, the differences can be dramatic.
There are also two products that provide leveraged inverse exposure to the crude oil market: the PowerShares DB Crude Oil Double Short ETN (NYSEArca: DTO), which compounds returns monthly, and the ProShares UltraShort DJ-UBS Crude Oil ETF (NYSEArca: SCO), which compounds returns daily.
The prospectus for DTO is available here.
Last 5 posts by IndexUniverse Staff
- Will UNL Beat UNG? - November 19th, 2009
- A Real Hedge Fund ETF? - November 17th, 2009
- ProShares’ Positive Tax Surprise? - November 17th, 2009
- Better Than Cash? - November 17th, 2009
- Stoxx Indexes Bought; Company Valued At $900M - November 13th, 2009
Crude Oil Futures, Crude Oil Market, Exchange Traded Funds, index universe, Investing Lessons, leveraged and inverse products;, short oil, UBS, United States Commodity Funds LLC;, United States Crude Oil Fund, United States Short Oil Fund, USD
 About IndexUniverse Staff (http://indexuniverse.com)
IndexUniverse encompasses the world of indexing and beyond. Our website and related subsites cover product and market developments related to index funds, exchange-traded funds (ETFs), index derivatives (futures / options / swaps), and the sophisticated investment strategies which use these financial tools. Our goal is to provide the industry's best news, columns, research, and features about the dynamic field of index-based investing and trading. Industry professionals, individual investors, business/finance students and academic researchers will find various features targeting their interests and needs. We also provide valuable tools and data to assess markets and investment products, and specialized discussion boards for our registered members to exchange cutting-edge ideas and market views. We aim to be educational, thought-provoking, and most importantly, rigorously independent in our perspective. The development of IndexUniverse was a global effort, originally led by Steven Schoenfeld and Jim Wiandt, supported by John Spence and a diverse team in the U.S., Europe and Latin America, and enhanced by editorial contributors from around the world. The site is now managed solely by Jim Wiandt and the global Index Publications LLC team. The site was originally started by Steven as a data and information complement to his book, Active Index Investing, published by Wiley Finance in July 2004. As he recognized the need and potential for such a resource, in August 2003, Steven partnered with Jim, who as editor of The Journal of Indexes similarly recognized the industry's need for timely, useful and independent information on products and markets. |
No recommendations, either expressed or implied, are being made to buy, sell, hold or short any of the mentioned stocks. No legal, tax or accounting advice is expressed or implied. Always contact your attorney, CPA, or tax advisor before acting on any legal or tax issues. StraightStocks.com is not responsible for the content, products, or services of any of the advertisers on this site. StraightStocks.com receives compensation from advertisers on this blog. Services and products referred to herein are trademarks, registered trademarks, servicemarks, and/or registered servicemarks of their respective trademark or servicemark owners.