Why We Will Not See A True Spot Price Oil ETF (DBO, USO)
Ben Fulton, Invesco Powershares, and CNBC’s Bob Pisani discuss why there is not a true oil ETF. Ben explains that the biggest problem is that fund Managers would need to buy allot of tankers and park them off shore to store the oil. The costs associated with this kind of arrangement makes Ben bold enough to speculate that we will never see a true spot price oil ETF. It appears that we are stuck with the futures based products that are riddled with tracking error. The fund manager’s goals, knowing this, is to identify the sources of the tracking errors and fix them to replicate spot prices as closely as possible.
ETFs mentioned: PowerShares DB Oil (NYSE:DBO), United States Oil (NYSE:USO).