New ETFs track oil prices without futures

Investors can bet on the price of oil going up or down or hedge other investments with the securities.
JUL 02, 2008
MacroMarkets today introduced two American Stock Exchange-traded funds that capture the commodity performance of oil without making investments in oil or futures contracts, said Sam Masucci, president and CEO and co-founder of the firm, with Robert Shiller, professor of economics at Yale University. Investors can bet on the price of oil going up or down or hedge other investments with the securities, he said. The two ETFs, MacroShares Oil Up and Oil Down, started to trade with $20 million in seed capital from pension funds and other institutional investors, which Mr. Masucci declined to identify. MacroMarkets will transfer assets dollar-for-dollar between the Up and Down securities to replicate the change in the benchmark price of NYMEX light sweet crude oil, he said. MacroShares holds about 75% of its assets in 90-day Treasury bills and the rest in other short-term instruments. State Street Bank is custodian of the assets. Investors in the ETFs, trading under the symbols OUY and DOY, respectively, receive all the interest earned from the short-term investments, minus MacroShares expense, every three months, Mr. Masucci said. The securities’ structure avoids concern in Congress about commodity futures investors driving up oil price, because the securities invest only in short-term money-market instruments, not futures, Mr. Masucci said.

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