As most investors would be aware, the ASX hasn't had the best time of it of late. Over 2022 so far, the S&P/ASX 200 Index (ASX: XJO) is down 6.6%, including the 0.09% rise we've seen thus far today. It's also been one of the most volatile starts to a year that we've seen in quite a while.
But not all ASX shares have been so flaky. For example, how has the BetaShares Crude Oil Index ETF (ASX: OOO) returned more than 18% over the past month?
Yes, this ASX exchange-traded fund (ETF) has risen 18.9% over the past month. It has risen from $6.24 a unit to the $7.40 we see today. That's a phenomenally large outperformance of the broader market.
Well, to answer this question, let's check out what this ETF invests in.
The BetaShares Crude Oil Index ETF is a rather unique one. Unlike most ETFs on the ASX, it doesn't actually invest in individual shares or companies. Instead, it tracks an index that follows the price of West Texas Intermediate (WTI) crude oil futures, hedged against currency movements.
A futures contract is a form of derivative that allows investors to make a bet on the future price of oil. In a gross simplification, if the price of WTI crude rises, this ETF is likely to do well.
Image source: Getty Images
OOO… BetaShares Crude Oil ETF gives investors black gold
Fortunately for OOO investors, the price of crude oil has indeed been doing well — actually very well — over the past 30 days. According to Bloomberg, WTI crude was being priced at around US$76 a barrel just one month ago. Today, it is asking more than US$90 for that same barrel. That's a rise of more than 18%.
So with that number in mind, it's perhaps no surprise that this ETF has performed so well over the same span of time.
It gets even better for investors if we zoom out a little. One year ago, WTI crude was being priced at just under US$56 a barrel. So again, it's not too surprising to see that the BetaShares Crude Oil Index ETF has returned a staggering 58.46% (as of 31 December). That includes a very meaty trailing dividend distribution yield of 18.8%.
But zooming out again, the picture isn't quite as bright. Even though OOO has given investors a very pleasing return over the past month and year, it's still very much underwater for any periods longer than that. It's returned an average of -12.8% per annum over the past 5 years and -16.73% per annum since its inception in 2011.
The BetaShares Crude Oil Index ETF charges a management fee of 0.69% per annum.
