Billions of dollars are pouring into oil exchange-traded funds as investors, many of them small savers more familiar with stocks than commodities, risk big losses and focus on the chance of huge rewards.
Five of the biggest oil ETFs have seen their assets more than quadruple since July to $5.4 billion as the oil market has had a roller-coaster ride, collapsing by 60 percent then rallying by almost a third.
ETFs, designed for investors who cannot or will not buy and sell oil directly themselves, offer easy access and exposure to oil volatility because they are based on traded futures markets.
Many small investors such as pensioners, hobby traders, and savers on fixed incomes are attracted to oil ETFs, which can be designed to take advantage of price rises or falls.
But the volatility and structure of the underlying markets also make such investments dangerous for unwary investors.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.