When it comes to investing in energy, oil ETF shares haven't delivered very good returns historically. But more recently, a somewhat unusual phenomenon in the oil futures markets could make oil ETF prices deliver better returns than the spot price of crude.
Why futures matter for oil ETFs
The name of that phenomenon is backwardation, and the reason it's important has to do with the strategy that the typical oil ETF uses to track crude prices. Many commodity ETFs, such as iShares Silver Trust (NYSEMKT: SLV ) and SPDR Gold (NYSEMKT: GLD ) , actually buy the underlying physical commodity, storing it in a vault for safekeeping and thereby connecting the value of the ETF share to an actual portion of the ETF's commodity holdings.
For oil ETFs, however, holding actual crude would be expensive and impractical. Therefore, most ETFs buy oil futures contracts to track changing prices.
Top High Tech Stocks To Buy Right Now: Tawana Resources NL(TAW.AX)
Tawana Resources NL engages in the exploration and evaluation of diamondiferous kimberlites and alluvials primarily in South Africa, Australia, and Botswana. The company also explores for gold and base metals in Liberia. It has interests in Daniel project, Kareevlei Wes, St Augustines, Lexshell, and Perdevlei properties in South Africa; Flinders Island and Eyre Peninsula properties in Australia; and Orapa property in Botswana. The company has a strategic alliance with Gryphon Minerals Ltd. Tawana Resources NL was incorporated in 1998 and is headquartered in Melbourne, Australia.
Top High Tech Stocks To Buy Right Now: Molex Incorporated(MOLX)
Molex Incorporated, together with its subsidiaries, engages in the design, manufacture, and sale of electronic components worldwide. It offers micro-miniature connectors, B-to-B connectors, SIM and SD card sockets, keypads, electromechanical subassemblies, internal and on-ground antennas, standard antennas, magnetic jacks, and subsystems for the telecommunications market; and power, optical, and signal connectors and cables for end-to-end data transfer, linking disk drives, controllers, servers, switches, and storage enclosures for the info-tech market. The company also designs and manufactures connectors for home and portable audio, digital still and video cameras, DVD players, and recorders, as well as devices that combine multiple functions in the consumer market, earphones, jumpers, and components for gaming machines. In addition, it provides network interface cards, software for industrial networks, cord sets, electrical solutions, and I/O connectors for industrial pr oduction equipment, as well as portable lighting to power distribution solutions for commercial construction, utility, petrochemical, and food and beverage industries; and cable assemblies, sealed and panel mount connectors, and other products for use in the infotainment and navigation, powertrain, safety and chassis, and body electronics in the automotive market. Further, the company offers connectors and custom integrated systems for diagnostic and therapeutic equipment used in hospitals, including x-ray, magnetic resonance imaging, and dialysis machines; and solid-state lighting products. Additionally, it provides manufacturing services to integrate specific components into a customer?s product. The company sells its products directly to original equipment manufacturers, contract manufacturers, and distributors. It markets its products through direct sales force and a network of distributors. Molex Incorporated was founded in 1938 and is based in Lisle, Illinois.
Hot High Tech Companies To Buy For 2014: Cdn Nat Res Com Npv (CNQ.TO)
Canadian Natural Resources Limited engages in the acquisition, exploration, development, production, marketing, and sale of crude oil, natural gas liquids (NGLs), and natural gas. Its products include natural gas, light and medium crude oil, primary heavy crude oil, bitumen, synthetic crude oil, and NGLs. The company operates primarily in North America; the United Kingdom portion of the North Sea; and C么te d�Ivoire, Gabon, and South Africa in offshore Africa. Its midstream assets comprise three crude oil pipelines and an electricity co-generation facility. As of December 31, 2011 the company�s gross proved crude oil and NGLs reserves were 4,090 million barrels (MMbbl), and gross proved plus probable crude oil and NGLs reserves were 6,521 MMbbl. It also had gross proved natural gas reserves of approximately 4,447 billion cubic feet (Bcf), and gross proved plus probable natural gas reserves of approximately 6,101 Bcf. Canadian Natural Resources Limited was founded in 1973 and is headquartered in Calgary, Canada.
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