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Troubled oil ETF again shuffles holdings amid market mayhem
For a second straight day, the biggest oil exchange-traded fund reshuffled the mix of futures it owns to track crude prices, extending their average expiration amid unprecedented volatility in its markets.
The US$3-billion United States Oil Fund LP (USO) took the measure in an effort to reduce its holdings in near-term contracts that have borne the brunt of losses as the global coronavirus lockdown saps demand for oil amid a supply glut.
The fund, which is the biggest single owner of West Texas crude futures, moved more of its money into contracts expiring in August and September while reducing June and July.
Moving money to longer-dated contracts means the fund is incurring roll costs, but is protecting against the possibility of having its net asset value fall below zero in the event that front-month oil futures turn deeply negative again. On April 16, the fund announced it was moving 20 per cent of its exposure to the second-month futures contract. USO on Tuesday shifted to holding 40 per cent in June futures, 55 per cent in July, and 5 per cent in August.
According to the most recent filing , the fund holds roughly 20 per cent of its portfolio in the June contract, 50 per cent in the July contract, 20 per cent in the August contract, and 10 per cent in September.
Extending the expiration of the contracts has become an urgent matter for the ETF after May futures, which the fund had already rolled out of, became engulfed in a selling frenzy on Monday that turned their price negative. Losses have tended to mass in near-term contracts over the past few weeks as concern mushroomed about where to store the crude delivered in such contracts.
At the same time, frantic reshuffling of its holdings has wrecked any claim the ETF has to being a passive product. In its filings, U.S. Oil Fund repeatedly notes that the strategy untethers it from its stated investment objective.
https://www.bnnbloomberg.ca/troubled-oil-etf-again-shuffles-holdings-amid-market-mayhem-1.1425424
nice anon
it's too bad they never enforced it. The entire thing was a legalese work around to not ever do anything about it.
>Imagine if Gold futures sellers were forced to make good on delivery to the buyers?
It would have a bigger impact on silver. All of the fake weekly reports (COT) or Committment Of Traders would be instantly shown as the shit they have always been.
GTFO amateur. You bring nothing to these discussions. Have something to contribute once
Just replying to yourself all the time.
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take yer meds ebot