New ETFs for Oil Futures

Claymore Securities Inc. and partner MacroMarkets LLC listed 2 oil-related ETFs (Exchange Traded Funds) on the American Stock Exchange on November 30th. They are issued as a closely linked pair, one for bullish investors on oil futures and the other for bears. Each hold short-term Treasuries and cash, and pledge to compensate each other based on changes in the settlement price of the Nymex Division light sweet crude oil futures contract.

Claymore MacroShares Oil Up Tradeable Shares (UCR) is meant for investors who want to take a long, or bullish, position on oil and will rise in value when futures prices increase. Conversely, Claymore MacroShares Oil Down Tradeable Shares (DCR) will make money when the price of oil would be falling. The latter can also be used as a hedge. Both are structured to track the benchmark price movement of West Texas Intermediate crude oil and comparable light sweet crude oil prices.

Robert Shiller, Chief Economist for MacroMarkets, is the architect of MacroShares and first addressed this concept of investment in his 1996 book "Macro Markets: Creating Institutions for Managing Society's Largest Economic Risks".

Both funds have expense ratio of 1.6% -- which is very high by industry standard. Currently, ETFs have average fees of only 0.43% of assets. Also, do not forget that you need to add broker commission on top of it anytime you buy or sell.

The Claymore MacroShares are structured very differently from other oil-linked ETFs on the market. PowerShares Dynamic Oil & Gas Services Portfolio (PXJ) invests in shares of publicly traded energy companies. The U.S. Oil Trust (USO) invests in oil futures and "rolls" the contracts to maintain exposure. The iPath Goldman Sachs Crude Oil Total Return Exchange Traded Note (OIL) managed by Barclays Global Investors also uses a similar strategy.