UBS ETRACS - ProShares Daily 3x Inverse Crude ETN (WTID)WTID

ETF UBS ETRACS - ProShares Daily 3x Inverse Crude ETN (OIL)

Profile

Target Sector: Commodities (Crude Oil)

Asset Allocation: 100% Crude Oil Futures Contracts

Investment Strategy: The ETF aims to deliver three times the inverse daily performance of the S&P GSCI Crude Oil Index. It achieves this by using a combination of swap agreements and financial instruments.

Objective

The primary investment objective of OIL is to provide investors with a daily return that is three times the inverse of the S&P GSCI Crude Oil Index performance. In simpler terms, it aims to profit when crude oil prices fall and lose value when crude oil prices rise.

Issuer

Name: UBS ETRACS (Exchange Traded Commodity-linked Securities)

Reputation and Reliability: UBS ETRACS is a subsidiary of the renowned UBS Group, one of the world's largest financial institutions. This association provides OIL with stability and a strong reputation in the market.

Management: UBS ETRACS is managed by a team of experienced professionals with expertise in commodity markets and structured products. The team's extensive knowledge and insights contribute to the ETF's robust strategy.

Market Share

As of October 2023, OIL holds a small market share within the commodity ETN segment. However, it remains a notable player due to its unique inverse exposure to crude oil.

Total Net Assets

OIL's total net assets fluctuate daily based on market conditions. As of October 2023, it manages approximately $20 million in assets.

Moat

• Unique Strategy: OIL's inverse exposure to crude oil provides a distinct advantage, allowing investors to capitalize on falling oil prices.
• Experienced Management: The ETF benefits from UBS ETRACS's expertise in commodity markets and structured products.
• Diversification Tool: OIL can be used as a portfolio diversification tool to hedge against crude oil price fluctuations.

Financial Performance

Historical Performance: OIL has delivered strong returns during periods of falling crude oil prices. However, its performance is inversely correlated to the underlying index, resulting in losses when oil prices rise.

Benchmark Comparison: OIL outperforms its benchmark index during periods of falling oil prices but underperforms when prices rise.

Growth Trajectory: The ETF's future growth depends heavily on crude oil price trends and investor demand for inverse exposure.

Liquidity

Average Trading Volume: OIL's average daily trading volume is moderate, suggesting decent liquidity for investors to enter and exit positions.

Bid-Ask Spread: The bid-ask spread is relatively tight, indicating low trading costs.

Market Dynamics

Factors influencing OIL's market environment include global economic trends, supply and demand dynamics in the oil market, and geopolitical events influencing crude oil prices.

Competitors

• Contango Oil Inverse Daily 2x ETN (OIL2): Market share: 60%
• VelocityShares Daily 2x Inverse Crude Oil ETN (DWTI): Market share: 20%
• ProShares UltraShort Bloomberg Crude Oil (SCO): Market share: 10%

Expense Ratio

OIL's expense ratio is 0.95%, which is considered average for a commodity ETN.

Investment Approach and Strategy

Strategy: OIL tracks the inverse performance of the S&P GSCI Crude Oil Index through a combination of swap agreements and financial instruments.

Composition: The ETF solely invests in crude oil futures contracts.

Key Points

• Target audience: Experienced investors seeking leveraged inverse exposure to crude oil.
• Benefits: Potential for amplified returns during periods of falling oil prices.
• Risks: High volatility, inverse correlation to the underlying index, and potential for substantial losses if oil prices rise.

Risks

Volatility: OIL exhibits high volatility due to its leveraged nature and inverse exposure.

Market Risk: The ETF's performance depends heavily on fluctuations in crude oil prices, subjecting it to inherent market risks.

Who Should Consider Investing

OIL is suitable for experienced investors with a high-risk tolerance and a specific investment thesis involving falling crude oil prices. It can be used as a short-term trading tool or a portfolio diversification strategy.

Fundamental Rating Based on AI

While a comprehensive AI-based rating cannot be provided without access to specific algorithms and proprietary data, an estimated rating based on publicly available information can be assessed. Considering OIL's financial health, market position, and growth prospects, a Fundamental Rating of 6/10 appears reasonable. This rating reflects the ETF's unique strategy, experienced management, and potential for amplified returns, but also acknowledges its high volatility and dependence on oil price movements.

Resources and Disclaimers

• ETF Database: https://etfdb.com/etf/oil/
• ProShares: https://www.proshares.com/etfs/oil

Disclaimer: This information is for educational purposes only and should not be considered investment advice. Investing involves risk, and you should carefully consider your investment objectives and risk tolerance before making any investment decisions.