PowerShares DB Oil Fund(DBO): Rubish at tracking Crude oil price!

Discussion in 'ETFs' started by freddel, Feb 25, 2011.

  1. freddel

    freddel

    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
     
  2. bone

    bone ET Sponsor

  3. clacy

    clacy

  4. 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.
     
  5. USO tracks gud.
     
  6. freddel

    freddel

  7. ETF's fucking suck if your trying for the same returns of the commodities there supposedly follow , even a fuckin idiot like me learned that the hard way . But so do the losses .

    One piece of advise NEVER EVER buy UNG (natural gas ETF)
     
  8. USO up 12.12% in last 5 days.
     
  9. JeffUSA

    JeffUSA

    I haven't had time to run the numbers yet but I'm starting to think that XOM tracks the price of Oil better than any friggin Oil ETF.
     
  10. freddel

    freddel

    not really... oil companies will not perform well in the mid-run according to the fact that high oil price could trigger a double deep recession in western economies which will in turn lower the exports of emerging economies and thus decrease the global demand for oil.
    The best short/mid term play are futures

    Look at the chart of XOM against ETF's
    http://uk.finance.yahoo.com/echarts? s=DBO#symbol=dbo;range=20110215,20110311;compare=xom+oih+uso;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=;
     
    #10     Mar 12, 2011