This Day On The Street
Continue to site right-arrow
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
TheStreet Open House

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

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,789.40 +111.50 0.67%
S&P 500 1,961.40 +10.58 0.54%
NASDAQ 4,471.5060 +18.7140 0.42%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs