The first oil ETF is almost here.
The Wall Street Journal (subscription required) today reports that the American Stock Exchange will launch a crude oil fund next Monday, with the symbol USO. (For a copy of the SEC filing, click here.) Another milestone in the world ETFs, which trade on exchanges like stocks.
Once the ETF is trading, investors will be able to buy direct exposure to crude oil futures contracts via a listed security for the first time. The question, of course, is whether there’s a compelling case for buying oil futures at this juncture.
Leave it to Wall Street to come out with a product after the price of oil has been climbing for the better part of nine years. That, of course, is the way the financial system works. When oil was languishing at just over $10 a barrel in late 1998, the idea of oil-related investment products was the financial equivalent of leprosy. Today, in the wake of a near five-fold climb in the price of crude from late-1998, the Street can’t talk enough about of the opportunities in energy. Indeed, there are any number of hedge funds dedicated to energy plying the markets that were mere ideas a few years back.