Can an ETF be too big?
That’s the question raised by the WSJ‘s Carolyn Cui. In the article Huge Oil Fund Rolls Positions, Roils Market, Crude Price, Cui writes that the United States Oil Fund (Ticker: USO) rolled its positions on Friday into the subsequent month.
The $3.3 billion fund accounts for about 22% of outstanding front-month contracts. Due to its large size, when the fund exits one contract and enters into another, market prices tend to move. Ciu says that, according to traders, smaller players try to get in front of the moves by the large funds which exacerbates price movements.
Oil dipped below $40 per barrel in intraday trading on Friday.