ETF Update
Crude ETFs Keep Losing as Oil Prices Rise
During the same periods, the E-rated PowerShares DB Oil Fund (DBO) gave up less on the way down, losing 67%, but has only rebounded 9.3%. The unrated PowerShares DB Crude Oil Double Long ETN (DXO) plummeted 93%, more than spot prices, and has since climbed 27%.
This risk is disclosed in the United States Oil Funds' most recent annual report, which says in "a prolonged period of contango, and absent the impact of rising or falling oil prices, this could have a significant negative impact." The opposite of contango is called "backwardation," when near-term contracts trade at higher prices than future ones. That situation usually boosts fund returns. The PowerShares DB Crude Oil Double Long ETN is the only fund of the group that outperformed crude prices in the weeks leading up to July 11. The fund, which started trading on June 17, returned 16% percent during those weeks, doubling the 8.3% rise of crude. Leveraged ETFs can do well over short periods but volatility can hurt returns long term.TheStreet Premium Services
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| Dow Jones | S&P 500 | NASDAQ | 10-Year Note |
|
|---|---|---|---|---|
| 12,393.45 | 1,310.33 | 2,827.34 | 15.81 |
Oil *
101.78
|
|
DOWN
26.41 |
DOWN
2.99 |
DOWN
10.02 |
DOWN
0.44 |
10 Yr
1.58%
SPDR Gold
151.62
|
|
-0.21%
|
-0.23%
|
-0.35%
|
-2.71%
|
Data delayed 20 minutes |
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