These funds track an index that includes several commodity assets. The three best-performing commodity funds rose to 47 percent last year when they offered exposure to energy prices, as oil remains at its highest level in eight years. Gasoline Fund, the United States Brent Oil Fund and the Invesco DB Energy Fund, which focuses on commodity futures contracts such as crude oil, natural gas, gasoline and heating fuel. ETFs offer exposure to physical commodities, not to commodity producers.
The UGA is structured as a commodity reserve, a private investment structure that brings together investor contributions to trade commodity futures and options. It is designed to track gas price movements. The ETF offers investors a way to bet on a rise in gasoline prices by investing in futures contracts on gasoline blends reformulated for oxygen blends (RBOB) and other gasoline-related futures. The fund can also invest in forward and swap contracts.
It provides investors with a way to implement a short-term tactical bias toward a specific segment of the energy market and is not likely to attract those who create a long-term buy-and-hold portfolio. The BNO is also structured as a commodity fund. The objective of BNO is for the daily percentage changes in the net asset value (NAV) of its shares to be reflected in fluctuations in the spot price of Brent crude oil. This price is measured by movements in the price of the BNO benchmark oil futures contract.
The ETF benchmark index is an almost one-month futures contract that is traded on the ICE Futures Exchange. Since Brent crude oil usually trades at a different price than West Texas Intermediate (WTI), BNO can be a useful way to gain alternative exposure. Its main investments are Brent crude oil futures contracts. BNO can also invest in forward and swap contracts.
Like the other two funds, the DBE is also structured as a commodity pool. Invest in futures contracts for some of the most traded commodities in the world, such as semi-sweet crude oil (WTI), heating fuel, Brent crude oil, RBOB gasoline and natural gas. Its purpose is to track changes in the excess profitability of the DBIQ Optimal Performance Energy Index, which includes futures contracts on energy commodities that are strongly traded. The fund provides a cost-effective and convenient way for investors to expose themselves to energy commodity futures.
However, it may not be suitable for all investors, as the fund focuses on investments in highly volatile markets. Oil is holding on to meager profits, as supply shortages cloud demand prospects. United States Gasoline Fund (UGA). VettaFi.
United States Gasoline Fund LP (UGA). Invesco DB Energy Fund (DBE). Invesco.