2015 Best Oil ETF No. 1: United States Oil Fund LP (NYSE Arca: USO) is the
most popular of the oil funds, with an average trading volume near 11
million shares. This ETF is actually a limited partnership rather than a
true ETF, though it trades like a stock (as ETFs do). USO’s managers invest
the partnership’s pooled assets in a variety of vehicles, from oil and gas
futures contracts to cash-settled energy options. The goal is to match the
performance in percentage terms (less expenses) of the spot price of WTI
crude.
With $858 million in assets, USO’s shares currently trade at a modest
premium (0.14%) to their net asset value (NAV). Due to the steep decline in
the price of oil, shares are currently near the low end of their 52-week
range of $20.53 to $39.44. USO has declined by 40% year-to-date, again
mirroring the price of crude. However, USO’s costs are low at 0.72%. That’
s among the lowest in the sector. USO’s share price should rise with oil in
2015.
2015 Best Oil ETF No. 2: PowerShares DB Oil ETF (NYSE Arca: DBO) tracks the
price and yield performance of the Deutsche Bank Liquid Commodity Index
using futures investments over various time frames. The index mirrors the
percentage change in WTI crude prices. DBO has an average daily volume of
just over 1.3 million shares, so it is highly liquid.
The fund’s assets total around $239 million, and DBO has traded within 0.5%
of its NAV lately. Its expenses are reasonable at 0.75%. DBO was down 44%
in 2014, and it’s still trading near the low end of its 52-week range. At
that discount, DBO can offer more upside than other funds when oil starts to
rebound.
2015 Best Oil ETF No. 3: ProShares Ultra DJ-UBS Crude Oil (NYSE Arca: UCO)
tracks the Dow Jones UBS Crude Oil Sub-Index, which also reflects the price
of WTI crude oil. However, it uses leverage in the form of swaps, forward
contracts, options, and futures to seek percentage results roughly twice as
large as the changes in crude itself.
This is the most popular of the leveraged funds, with an average daily
volume of 2.8 million shares. The effects of the leverage are evident in the
more volatile trading range, which can rise and fall 10% or more in a day.
USO has $331 million in assets, and expenses are 0.95%.