This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Amex Launches Oil ETF

The Amex struck black gold Monday with the release of the first U.S.-listed exchange-traded fund designed to track the price of oil.

The United States Oil Fund (USO) began trading Monday morning, opening at a price of $68.25, which was the closing price of the May oil futures contract on the New York Mercantile Exchange. Victoria Bay Asset Management, an Alameda, Calif., commodity-pool operator, will manage the new fund.

The objective of the USO is to reflect the spot price of West Texas Intermediate light, sweet crude delivered to an Oklahoma-based storage facility. The fund will invest in oil futures contracts traded on the New York Mercantile Exchange or other U.S. and foreign exchanges. It will also hold other interests, such as cash-settled options and forward contracts, in order to gain exposure to the price of oil.

Although the USO is traded on an exchange and can be sold short like an ETF, it is technically structured as a commodity pool, not a mutual fund.

In this way, the fund is reminiscent of the DB Commodity Index Tracking Fund (DBC), which was launched in February of this year. The DBC offers investors the ability to track the Deutsche Bank Liquid Commodity index, a fairly energy-heavy index in its own right, with crude oil comprising 35% of the fund, followed by 20% heating oil, 12.5% aluminum, 10% gold and 11.25% in both corn and wheat.

In terms of collateral, the DBC is backed by short-term Treasury bills. The yield generated from the fixed-income portion of the fund is used to offset the fund's fees, which are comparatively cheap at 95 basis points.

The USO will also hold Treasuries as collateral, but it carries a lower expense ratio of 50 basis points. Brokerage fees aren't included.

A Golden Gusher?

The boom in prices of commodities like oil and precious metals has caused a stampede among ETF providers desperate to turn hard assets into investor-friendly funds and, more importantly, gain first-mover advantage.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
IAU $10.84 -0.41%
USO $15.06 -1.80%
GLD $107.48 -0.33%
DBC $15.21 -1.20%
AAPL $109.36 -0.92%

Markets

Chart of I:DJI
DOW 16,094.94 -279.82 -1.71%
S&P 500 1,917.89 -33.24 -1.70%
NASDAQ 4,675.7510 -57.7460 -1.22%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs