In a time of uncertainty and hurdles for leveraged ETFs, the creator of the United States Oil Fund (USO) and the United States Natural Gas Fund (UNG), the United States Commodity Funds LLC, has launched the newest member of its family, the United States Short Oil Fund (DNO).
This new fund is an inverse exchange traded fund which is designed to track the changes in percentage terms of the spot price of light, sweet crude oil delivered to Cushing, Oklahoma, as measured by the price changes of a designated benchmark futures contract on light, sweet crude oil traded on the New York Mercantile Exchange.
The introduction of DNO comes at a time when the CFTC has been scrutinizing commodity ETFs. Although the regulations have still not been imposed, many have felt threatened by the anticipation of the new restrictions, which have even forced some, like the PowerShares DB Crude Oil Double Long ETN (DXO) to shut down, knowing that the fund’s size would make it particularly vulnerable to position limits.
DNO will most likely face the same issues and problems that other commodity ETFs have; however, on the positive side, creation limitations may take awhile to kick in, but when they do, there is a good chance that this fund could be curtailed if it proves to be popular.
