When the price of oil goes down this ETF goes up

By Matthew MacClary

This month the price of oil has dropped dramatically.

There are two sides to every trade, and often you can find an exchange traded fund that tracks both sides of the trade for an asset like oil.

oil-prices-sco

 

Oil Hedge

Such is the ProShares UltraShort Bloomberg Crude Oil ETF (SCO).

SCO is an inverse oil fund that has been a part of my Stable Equity portfolio on Covestor for a long time.

In my opinion, the role that this ETF plays in the Stable Equity portfolio is typically as a hedge to offset losses in the global equity markets.

When the global economy stumbles the demand for oil typically fails leading to lower oil prices.

In November, SCO has been a key driver in performance for the Stable Equity portfolio.

Whether OPEC maneuvering or an impending recession is the primary of recent oil price volatility, SCO is a very interesting fund, in my opinion, to examine for a role in a balanced portfolio.








 

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Photo credit: Vicky Brock via Flickr Creative Commons

DISCLAIMER: The investments discussed are held in client accounts as of November 30, 2014. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable. Past performance is no guarantee of future results.
Matthew MacClary

Matthew MacClary

My work as a software engineer at a technology corporation helps me to take a methodical approach to my investing.

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