Registered: Feb 2011
Posts: 40

Hi there,

I have bought last week, on the 15th of February when the crude oil spot price was $85.3, some PowerShares DB Oil Fund at $28.
I'm very supprised by the gap between the return from this ETF and the actual crude oil spot price:
Today:
Crude oil trade at $97.36 which imply that I should have a return of 14.13%
while PowerShares DB Oil Fund is trading at $30 which make an absolute of return of 6.2%.

How such a big gap is possible?

Thanks in advance for your answer.

Cheers,
Freddy

Registered: Apr 2002
Posts: 4327

Because many ETF's apparently are very poor proxies for the pure commodity play. Factor in the basket construction slippage and the management fees - and you get what you pay for.

http://www.reuters.com/article/2011...lsSector&rpc=43

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Registered: Sep 2006
Posts: 2387

I would recommend OIH over DBO.....

http://stockcharts.com/freecharts/p...%20dbo%2C%20oih

Registered: Dec 2006
Posts: 458

You can never replicate the spot returns of a commodity. Unless you buy physical and store it at your house. And even that costs money (opportunity costs, transaction costs, storage, insurance etc.)

And in the futures world you always pay transaction costs, slippage and must account for the term structure.

Adjusted for contango and ETF costs, the crude oil fund USO had a net gain of 0% over the last 18 months while spot crude went from $70 to $100 over the same period.

Registered: May 2004
Posts: 1398

USO tracks gud.

Registered: Feb 2011
Posts: 40

Quick comparison between DBO, OIH and USO since the 15/02/2011:


http://uk.finance.yahoo.com/echarts...le=off;source=;

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