In the July 20th edition of the Wall Street Journal, Eleanor Laise discusses two new MacroShares ETFs in “Funds to Bet on the Ups and Downs of Oil”.
MacroShares launched the $100 Oil Up (NYSE: UOY) and MacroShares $100 Oil Down (NYSE: DOY) earlier this month. The two exchange traded products have a unique approach to tracking oil price movement.
Instead of holding futures contracts, these funds hold treasury securities and cash. The funds shift assets back and forth between each other as the price of oil changes. These funds cannot influence the price of crude because they are not invested in the oil market.
If the price of oil rises too high, DOY will transfer assets to UOY and may eventually force the funds to liquidate. An earlier version of the Oil MicroShares liquidated this month. The expense ratio is 0.95% for both funds.
Brad Zigler, managing editor at hardassetinvestor.com, suggests investors try the U.S. Oil Fund (USO) or the iPath S&P GSCI Crude Oil Total Return Index Exchange Traded Note (OIL) as alternatives for oil exposure. Expense ratios for these funds are 0.5% and 0.75% respectively.