How Much Money Have Millennials Lost in Leveraged Oil Trades?

oil600X300According to recent TD Ameritrade data compiled by Bloomberg, the world’s youngest age cohort has been pouring money into a leveraged oil ETN — right into the teeth of a massive oil price decline.

From Bloomberg:

When picking ETF investments, millennials with TD Ameritrade accounts prefer a collection of low-cost Vanguard funds. But when it comes to what they like to trade, they show a greater appetite for risk. According to TD Ameritrade data, millennial clients’ fifth-most-traded security is the VelocityShares 3x Crude Oil ETN (UWTI), which provides triple the exposure to front-month oil futures. Despite volatility seven times that of the S&P 500 Index, the fund trades $400 million a day and has $1.2 billion in assets.


Table: Bloomberg

Now for the kicker: the VelocityShares 3X Long Crude ETN (NYSE:UWTI) has fallen 54% since the start of 2016, and 88% year-over-year. That could mean a whole lot of losses in millennial portfolios, as anyone bullish on oil this year — especially on a leveraged basis — has been on the exact wrong side of the trade.

To be fair, these young investors might be getting in and out of the UWTI very quickly, and hedging their positions elsewhere. Heck, some of them might even be making serious money on big one-day spikes like we saw last month.

But when you consider that 90% of all traders lose money (a conservative estimate if you ask me), it’s hard to imagine the majority of millennials trading triple leveraged funds aren’t getting creamed.

The UWTI fell another $0.38 (-2.11%) to $17.63 in premarket trading Thursday.

UWTI-2016-08-04

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