- Crude oil is a vital commodity that supplies the worldwide market with energy and petroleum goods.
- Oil derivatives or the USO exchange traded product, which tracks the price of WTI crude, allow investors to speculate directly on the price of oil.
- Oil drillers and oil services businesses, as well as ETFs that specialize in these sectors, provide another way for investors to play the oil markets in a more indirect way.
Is there an ETF for WTI?
- Over the last year, oil prices have outperformed the larger stock market.
- DBO, BNO, and OILK are the oil exchange-traded funds (ETFs) with the best one-year trailing total return.
- Futures contracts for West Texas Intermediate (WTI) light sweet crude oil are the top holdings of the first and third ETFs, while futures contracts for Brent Crude Oil are the top holding of the second.
What is WTI crude oil ETFs?
Crude Oil ETFs follow crude oil price changes, allowing investors to obtain exposure to the market without having to open a futures account.
Which oil ETF should you buy right now?
FCG, PXE, and PXI are the oil and gas exchange-traded funds (ETFs) with the best one-year trailing total returns. DCP Midstream LLC, Continental Resources Inc., and Cheniere Energy Inc. are the top holdings in each of these ETFs.
Is there an ETF for crude oil?
The United States 12 Month Oil Fund (USL) and the United States Oil Fund (USO) are two prominent crude oil ETFs (USO). The United States Commodity Fund, LLC is the issuer of both ETFs, however they have different underlying futures holdings.
How do oil futures exchange-traded funds (ETFs) work?
Before going in and buying an oil ETF, investors need be aware of a few essential aspects. The first is that oil ETFs perform poorly in terms of tracking the price of crude oil. How is it possible? Oil ETFs are mutual funds that invest in oil futures contracts. However, because oil futures contracts expire, the ETF must actively shift from the expiring contract to the next contract, a process known as “rolling,” in order to retain the fund’s value.
This may not appear to be a huge matter at first glance, but the problem for ETF investors is that two futures contracts are rarely priced the same.
When future contracts are priced higher than current contracts, a phenomenon known as contango, the ETF holds fewer contracts than it did before the roll. An example can be found in the table below.
Oil prices are currently in a downward spiral, putting a damper on investment performance.
Is there an oil ETF from Vanguard?
Crude oil ETFs, like many other exchange-traded funds (ETFs), are an investment alternative for those who desire exposure to the oil sector without the complexities and hazards associated with oil futures. Crude oil exchange-traded funds (ETFs) provide investors with exposure to a variety of aspects of the sector while being professionally managed.
The Vanguard Energy ETF (VDE) provides investors with a broad view of the oil industry. Continue reading to learn more about this ETF’s top holdings, returns, and fees.