Is your ETF keeping up?

Exchange Traded Funds (ETF) can be an excellent way to invest.  But not all funds are created equal.  Some ETFs do a poor job of tracking the underlying asset or sector that they attempt to mimic.

For example, last year West Texas Intermediate Oil appreciated over 100% yet the ETF that tracks it, USO, was up less than 43%.  (see chart)

USO isn’t a bad fund, in fact, it’s one of the best managed ETFs in the commodity sector.  The problem is that funds which employ sophisticated trading strategies (niche sectors, commodities, inverse, x-multipliers) do so at a high cost…which may deteriorate principal.  This is referred to as DECAY.

I discuss this subject in a recent YouTube video:


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