For today’s segment of Futures Measures, Frank, James, and Pete talk about how ETF construction affects pricing. We push past our discussion on backwardation and contango and take a close look at the drag impact on ETFs.
They graphically compare pairs of futures and ETFs such as:
Crude Oil Futures (/CL) and Crude Oil ETF (USO)
Natural Gas Futures (/NG) and Natural Gas ETF (UNG)
While also going through Oil and gas’s monthly returns over the past two years. Interestingly we see that UNG has reverse split its stock twice to fight the drag. WDIS