Francis Groves

Spot Oil Funds: One in the Hand Is Better than One in the Bush

Thanks for that.

The new Source ETC certainly seems to track the spot price very well, according to Source's own chart. But that's mostly projecting back what their ETC would have done if it had been around in the last year or two. So maybe they just tried out various roll strategies to see which produced the best fit, which doesn't necessarily mean their one month contract/six months contract will continue to do so going forwards, I suppose.

Spot Oil Funds: One in the Hand Is Better than One in the Bush

Thanks for a very helpful article but I'm not sure if I can apply what I've read to the new Source ETC - that's the S&P GSCI Crude Oil Enhanced TR Treasury Bill Secured (GR:SEWTI), right?

There's no dividend presumably because it's an ETC. However, somebody (the investor?)gets a coupon from those treasury bills and, even if it's only enough to offset part of the management expenses, that counts as positive carry.

I read the factsheet and could not work out how dynamically switching between sixth month future and next month future improved the tracking to being so close to spot price tracking. I guess more will be written about this over the next few weeks and I'm content to bracket that. As far as carry is concerned, does the new ETC have some contango (or roll) negative carry but not as much as all the other crude futures ETCs?

Natural Gas ETF Suspends New Shares: Are There Alternatives?

I've been following this discussion about 'closed end' in the context of commodity futures contracts and (what Europeans call) exchange traded commodities. I was surprised at Dian's eventual explanation. Her original remark makes perfect sense if you replace 'closed end' with 'fixed term' and 'open end' with 'perpetual'. But these limits on futures contracts are surely only potential most of the time; they can't be said to explain the real paradox of ETC, building a perpetual investment out of fixed term contracts.


On Aug 17 09:07 PM Fivethousandoverlibor wrote:

> Thank you Dian. Appreciate the response. I think it is a misnomer
> to use the term "closed-ended" when referring to futures contracts,
> especially in the context of a currently closed-ended fund such as
> UNG. While individuals and entities can experience limitations on
> their individual participation within regulated futures markets,
> the market in aggregate is not closed-ended. Thanks again for the
> response.

3 Things to Look for When Researching ETFs

Not having used the iShares Canadian website I was surprised at your criticisms because I find the site for UK investors is pretty good. But the Canada website doesn't seem as good and I couldn't see any reference to a change in the index tracked for XMD.

Isn't tracking error normally calculated before the expense ratio is added. After all the tracking error could be positive.

Different Sort of ETF Proposed to Short Crude Oil

If USSO is going to invest in oil futures, I don't see where the shorting comes from (apart from the promise of US Commodity Funds). Also, if the fund has near month contracts as an asset, aren't the investors entitled to the returns of their asset? Secondly, when it gets to within two weeks of the roll on time the fund goes short the next month's contract, I presume, not long. That seems like quite a change of tempo around the 16th or 17th of every month.

Just puzzled, I'll try to find out more from the filing.

/Melrose

ETFs Can Help Democratize Savings

Thanks for that. I agree that people taking more responsibility for their own finances and pensions is a long term trend and that ETFs have a part to play in that.

It seems to me that Keynes meant what 'savers' in a narrow sense. If the saving is done creatively providing funds for new businesses, new inventions etc., rather than just going into deposit accounts, then everyone should win.

Avoid USO with These Alternative Funds

very helpful explanation of the effect of rolling on to the next contract on an ETC (or commodity ETF if you prefer).

Avoid USO with These Alternative Funds

I don't see what compounding has to do with a non-leveraged, long exchange traded commodity like USO.


On Jun 16 08:29 AM Kalani Martin wrote:

> You make a good point about the effects of contango as USO rolls
> over their futures contracts monthly. You fail to mention that products
> like DBO and DXO don't have that problem which is why they are doing
> a much better job of tracking the price of crude oil. You also fail
> to mention the most important reason why these ETF/ETN products will
> never come close to tracking the exact price movement of crude oil,
> because they compund daily. This is a pretty big omission from your
> article and is one of the most important things an investor should
> consider before buying these products. Click on the article below
> to read about how the different products are tracking vs. crude oil.
>
>
> seekingalpha.com/artic...

'Don't Fight the Fed' ETFs: Time to Reconsider Mortgage Debt Investments?

I thought that the Fed investing in MBS was genuinely a new development. For investors to follow the Fed in this instance, they would have to buy the MBS rather than an ETF that invest in MBS bonds, which I understood were already backed by your Fannie Mae, Freddie Mac etc.

Francis Groves, England