"BNO tracks Brent by holding near-month futures contracts, which means the fund must continuously sell expiring contracts and buy new ones. When the futures market is in contango (where future-dated contracts cost more than current ones), each roll locks in a loss before the underlying price moves. This drag compounds quietly and can meaningfully separate BNO's returns from spot Brent prices."
"Brent spot has declined from $79.27 in January 2025 to $70.89 in February 2026, a sustained downtrend that historically creates favorable conditions for contango and amplifies roll cost drag on funds like BNO."
"The IEA has forecast a supply surplus of up to 4 million barrels per day by 2026, a direct headwind for Brent prices and anything tracking them. Roll costs are invisible on a price chart but real in NAV erosion, and a declining spot price environment"
The United States Brent Oil Fund (BNO) has surged 50.85% year-to-date amid bullish retail sentiment on Reddit, but this performance obscures significant hidden costs. BNO carries a 1.14% annual expense ratio and tracks Brent through near-month futures contracts, requiring continuous rolling. When futures markets are in contango—where future-dated contracts cost more than current ones—each roll locks in losses before price movements occur. This drag compounds over time and meaningfully separates BNO's returns from spot Brent prices. Brent spot prices have declined from $79.27 in January 2025 to $70.89 in February 2026, creating sustained contango conditions that amplify roll costs. Reddit discussions show genuine debate about BNO's efficiency as a long-term holding vehicle.
Read at 24/7 Wall St.
Unable to calculate read time
Collection
[
|
...
]