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DWT ETF — Holdings & Analysis

The VelocityShares 3x Inverse Crude Oil ETNs linked to the S&P GSCI Crude Oil Index ER New (DWT) is an equity ETF seeking to replicate, net of expenses, three times the inverse of the S&P GSCI Crude Oil Index ER. With $0.28 billion in assets under management and an expense ratio of 1.50%, DWT offers investors a leveraged inverse exposure to crude oil futures. DWT is designed for sophisticated investors seeking short-term tactical exposure to the crude oil market, rather than long-term investment.

VelocityShares 3x Inverse Crude Oil ETNs linked to the S&P GSCI Crude Oil Index ER New (DWT) ETF — Price, Holdings & Analysis

The VelocityShares 3x Inverse Crude Oil ETNs linked to the S&P GSCI Crude Oil Index ER New (DWT) is an equity ETF seeking to replicate, net of expenses, three times the inverse of the S&P GSCI Crude Oil Index ER. With $0.28 billion in assets under management and an expense ratio of 1.50%, DWT offers investors a leveraged inverse exposure to crude oil futures. DWT is designed for sophisticated investors seeking short-term tactical exposure to the crude oil market, rather than long-term investment.

ETF Overview

The investment seeks to replicate, net of expenses, three times the opposite (inverse) of the S&P GSCIÂ Crude Oil Index ER. The index tracks a hypothetical position in the nearest-to-expiration NYMEX light sweet crude oil futures contract, which is rolled each month into the futures contract expiring in the next month. The value of the Index fluctuates with changes in the price of the relevant NYMEX light sweet crude oil futures contracts.
DWT provides a leveraged inverse exposure to the S&P GSCI Crude Oil Index ER, which tracks a hypothetical position in the nearest-to-expiration NYMEX light sweet crude oil futures contract. The fund aims to deliver three times the inverse daily performance of the index, meaning it is designed to increase in value when crude oil prices decline and vice versa. The index is rolled each month into the futures contract expiring in the next month. Due to the leveraged nature and daily reset, DWT is most suitable for short-term trading strategies and is not intended for buy-and-hold investors. The fund's performance is highly dependent on the daily movements of crude oil futures contracts, making it a tool for those with a strong understanding of the commodity market and a high-risk tolerance.

Risk Metrics

DWT carries significant risks due to its leveraged nature and focus on crude oil futures. The 3x leverage magnifies both gains and losses, potentially leading to rapid erosion of capital. The fund is subject to volatility risk associated with crude oil price fluctuations. The high expense ratio of 1.50% further detracts from returns, especially if held for extended periods. The fund's beta of 5.56 indicates a very high level of volatility compared to the broader market. Additionally, the daily reset feature can lead to significant tracking error and performance divergence over longer time horizons, making it unsuitable for long-term investment strategies. Investors should carefully consider their risk tolerance and investment objectives before investing in DWT.

Expense Ratio

1.50%

Dividend Yield

0.00%
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Risk Metrics

  • Beta: 5.56

Questions & Answers

What is DWT and what does it track?

DWT, or VelocityShares 3x Inverse Crude Oil ETNs linked to the S&P GSCI Crude Oil Index ER New, is an exchange-traded note that seeks to provide three times the inverse of the daily performance of the S&P GSCI Crude Oil Index ER. This index tracks a hypothetical position in the nearest-to-expiration NYMEX light sweet crude oil futures contract, which is rolled monthly. DWT is designed for sophisticated investors who want to make short-term, tactical bets against the price of crude oil. Due to its leveraged nature and daily reset, it is not intended for long-term investment.

What is the expense ratio for DWT?

The expense ratio for DWT is 1.50%. This means that for every $10,000 invested, $150 is deducted annually to cover the fund's operating expenses. This is significantly higher than the average expense ratio for equity ETFs, which is around 0.44%. The high expense ratio reflects the complexity and leveraged nature of the fund's investment strategy, which involves actively managing positions in crude oil futures contracts.

What are the top holdings in DWT?

As an exchange-traded note (ETN), DWT does not hold physical assets in the same way as an exchange-traded fund (ETF). Instead, it represents a debt obligation of the issuer, VelocityShares, linked to the performance of the S&P GSCI Crude Oil Index ER. The value of DWT is therefore tied to the price movements of crude oil futures contracts, rather than specific company stocks or bonds. Investors should be aware that the ETN structure exposes them to credit risk of the issuer, in addition to the market risk associated with crude oil futures.

Is DWT a good long-term investment?

DWT is generally not considered a suitable long-term investment due to its leveraged nature and daily reset mechanism. The fund is designed to deliver three times the inverse of the daily performance of the S&P GSCI Crude Oil Index ER, which means its performance can deviate significantly from the index over longer time periods due to the effects of compounding. The high expense ratio of 1.50% also detracts from long-term returns. Past performance does not guarantee future results.

How does DWT compare to similar ETFs?

DWT stands out due to its 3x inverse leverage, offering a more aggressive approach compared to non-leveraged or 2x leveraged inverse crude oil ETFs. Its expense ratio of 1.50% is higher than many other commodity ETFs, reflecting the cost of managing its leveraged strategy. With AUM of $0.28 billion, DWT is a moderately sized fund in its category. Investors should compare DWT's leverage, expense ratio, and tracking error to other similar ETFs to determine the best fit for their investment objectives and risk tolerance.

Does DWT pay dividends?

DWT does not pay dividends. Its dividend yield is 0.00%. As an inverse leveraged ETN focused on crude oil futures, DWT's returns are derived from price movements in the underlying index, not from dividend payments. Investors seeking income should consider other investment options that prioritize dividend distributions.