With the long-awaited crude oil ETF (NYSEARCA:USO) due to have its bell rung on the American Stock Exchange this morning, Morningstar’s Lawrence Jones – no, I’d never heard of him, either – tolled in:
While investors might find this type of commodity play enticing, given the recent run up in oil prices, we're wary of such narrowly focused ETFs and think that the timing of this offering might be particularly bad, with oil already at near-historic highs. In the end, we'd like to remind investors that correctly calling the price trends of commodities is difficult, if not impossible, over the long term, and thus this fund would be inappropriate for most investors.
No mention of the big huzzah due Nicholas Gerber for making possible a pure crude play for those who choose not to take their chances on the NYMEX floor or an ICE screen. Or the big huzzah for a cost structure competitive with other resource-based ETFs or sector mutual funds. Or some hint that a pure play might sometimes make more sense than an equity-based mutual fund or ETF. Or…oh, never mind.
[Image © Robert Thompson via www.cartoonstock.com]
UPDATE: Looks like that “last minute go-ahead from the Securities and Exchange Commission