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Investors Over-Concentrated In Funds Exposed To Losses Due To Drops In Oil Prices May Have Viable Arbitration Claims

Oil prices have rapidly tumbled to under $50 a barrel, from well over $100 a barrel, leaving prices at their lowest level since 2009. As a result of the plummet in oil prices, some investors whose portfolios were concentrated in investments whose value is linked to the price of oil or other energy products have lost significant sums. Such investments may include private placements, stocks, and ETFs. On the private placement side alone the Securities Exchange Commission (SEC), has stated that since 2008, approximately 4,000 oil and gas private placements have attempted to raise nearly $122 billion in investor capital. However, research has shown that some of these oil and gas private placements pose enormous risks and, a significant majority of the oil and gas funds offered by some sponsors have lost money (even before the recent drop in oil prices).

15.2.24 oil rigs at sunset

Leveraged ETFs

In addition to the inherent risks of such investments, some investors’ portfolios may be over-concentrated in oil and gas stocks or ETFs. Some of these ETFs may be leveraged or non-traditional ETFs. These types of funds will tend to rise or fall in value even more rapidly than the price of oil and gas, due to internal leverage, or the borrowing of money by the funds to increase their exposure energy prices.

Some “leveraged ETF” funds of this nature are listed below:

AXEN – iShares MSCI ACWI ex US Energy Sector Index ETF

CHIE – Global X China Energy ETF

DBE – PowerShares DB Energy ETF

EMLP – First Trust North American Energy Infrastructure ETF

ENFR – Alerian Energy Infrastructure ETF

ENY – Claymore/SWM Canadian Energy Income ETF

ERX – Direxion Daily Energy Bull 3X Shares ETF

ERY – Direxion Daily Energy Bear 3X Shares ETF

FILL – iShares MSCI Global Energy Producers Fund

FXN – First Trust Energy AlphaDEX ETF

ICLN – iShares S&P Global Clean Energy Index ETF

IPW – SPDR S&P International Energy Sector ETF

IXC – iShares S&P Global Energy Sector ETF

IYE – iShares Dow Jones US Energy Sector ETF

JJE – iPath DJ-UBS Energy Total Return Sub-Index ETN

OGEM – EGShares Energy GEMS ETF

ONG – iPath Pure Beta Energy ETN

PSCE – PowerShares S&P SmallCap Energy Portfolio

PUW – PowerShares WilderHill Progressive Energy ETF

PXE – PowerShares Dynamic Energy Exploration & Prod ETF

PXI – PowerShares Dynamic Energy ETF

RGRE – RBS Rogers Enhanced Energy ETN

RJN – ELEMENTS Rogers International Commodity Energy ETN

RYE – Rydex S&P Equal Weight Energy ETF

UBN – UBS E-TRACS CMCI Energy Total Return ETN

VDE – Vanguard Energy ETF

XLE – Energy Select Sector SPDR

Natural Gas ETFs

Even funds that are not internally leveraged may have suffered significant losses due to their concentrated exposure to the price of natural gas. Some funds concentrated in investments linked to the value of natural gas are listed below:

DCNG – iPath Seasonal Natural Gas ETN

DDG – The Short Oil and Gas ProShares ETF

FCG – First Trust ISE-Revere Natural Gas ETF

BOIL – ProShares Ultra DJ-UBS Natural Gas ETF

KOLD – UltraShort DJ-UBS Natural Gas ETF

FRAK – Market Vectors Unconventional Oil & Gas ETF

GASL – Direxion Daily Natural Gas Related Bull 3X Shares ETF

GASX – Direxion Daily Natural Gas Related Bear 3X Shares ETF

GASZ – ETRACS Natural Gas Futures Contango ETN

GAZ – iPath DJ AIG Natural Gas TR Sub-Index ETN

IGAS – Global Natural Gas Small Cap Equity ETF

MLPG – UBS E-TRACS Alerian Natural Gas MLP Index ETN

NAGS – Teucrium Natural Gas Fund

UNG – United States Natural Gas ETF

Crude Oil ETF’s

Funds that are not internally leveraged may also have suffered significant losses due to their concentrated exposure to the price of crude oil. Some funds concentrated in investments linked to the value of crude oil are listed below:

BARL – Morgan Stanley S&P 500 Crude Oil Linked ETN

BNO – United States Brent Oil Fund

DBO – PowerShares DB Oil ETF

DNO – United States Short Oil Fund ETF

DTO – PowerShares DB Crude Oil Double Short ETN

DUG – UltraShort Oil & Gas ProShares ETF

IOIL – Global Crude Oil Small Cap Equity ETF

FRAK – Market Vectors Unconventional Oil & Gas ETF

OIH – Market Vectors Oil Services ETF

OIL – Goldman Sachs Crude Oil Total Return ETN

OILZ – ETRACS Oil Futures Contango ETN

OLEM – iPath Pure Beta Crude Oil ETN

OLO – PowerShares DB Crude Oil Long ETN

SCO – ProShares UltraShort DJ-AIG Crude Oil ETF

SZO – PowerShares DB Crude Oil Short ETN

USO – United States Oil Fund ETF

USL – United States 12 Month Oil Fund ETF

UHN – United States Heating Oil Fund ETF

UCO – ProShares Ultra DJ-AIG Crude Oil ETF

DDG – The Short Oil and Gas ProShares ETF

CRUD – Teucrium WTI Crude Oil Fund

WCAT – Jefferies TR/J CRB Wildcatters Expl& Prod Equity ETF

FOL – FactorShares 2X Oil Bull/S&P500 Bear ETF

SNDS – Sustainable North American Oil Sands ETF

Brokers who sell oil and gas investments have an obligation to make sure that the investment is suitable for the investor and to disclose all the risks associated with the product. If you suffered significant losses are a result of possible unsuitable recommendations, you may be able to recover your losses in FINRA arbitration. To find out more about your legal rights and options, contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or for a no-cost, confidential consultation.


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