What exactly is a futures ETF?

[thecodebear]

I get what normal ETFs are. But what the heck is a futures ETF? Cuz futures are just bets on where the price of something is going to be in a certain amount of time. So they are usually short term price bets, rather than actually investing in something. In futures you specify a price for the end of your bet right? So how does a futures ETF work? How does an ETF take into account the short term nature of futures and the bets on different prices?

And why would anyone want to buy a futures ETF? I get owning bitcoin, I get having a bitcoin etf for people who want to invest but don't understand the real point of bitcoin so don't want to deal with actually owning their bitcoin but just using it as an investment, and I get futures where you can make short term bets on your price prediction as an alternative to just trading it, but whats the point of a futures ETF?

[jackg]

but whats the point of a futures ETF?

I think it stems from companies trying to hedge themselves to stay competitive even if market conditions change.

If you bought oil last year for $3/gallon as an electric company and now have to buy it for $6/gallon, instead you could've (as a lot of companies do) estimate how much energy you'll use and either open a futures contract directly with the producer to buy it at say $3.30 a gallon instead for a certain amount of years then you can still offer a good price to your consumers. Most pension firms are also in the market of life insurance too for the same reason.

Every other etf sort of stemmed from that, as well as shares normally needing to be held in the country they're bought (this is referred to as a bond normally though but can be called an etf) or you have to sign a contract with thst country and provide an application for holding the stocks.

[Weng simok]

I get what normal ETFs are. But what the heck is a futures ETF? Cuz futures are just bets on where the price of something is going to be in a certain amount of time. So they are usually short term price bets, rather than actually investing in something. In futures you specify a price for the end of your bet right? So how does a futures ETF work? How does an ETF take into account the short term nature of futures and the bets on different prices?

And why would anyone want to buy a futures ETF? I get owning bitcoin, I get having a bitcoin etf for people who want to invest but don't understand the real point of bitcoin so don't want to deal with actually owning their bitcoin but just using it as an investment, and I get futures where you can make short term bets on your price prediction as an alternative to just trading it, but whats the point of a futures ETF?

ETF futures can be interpreted the same as stocks and deposits. Bitcoin ETFs are converted into physical forms such as gold with the aim that they can provide high security to novice investors.

[mk4]

You pretty much said it: besides for hedging purposes(making a counter-trade on your long position to decrease risk), futures ETFs in general are a lot more for the speculative types; pretty much something that 99% of us here shouldn't touch, and just leave it to the people with expertise on trading these stuff.

But yes, an actual spot bitcoin ETF is where it's at when talking about actual investing.

[adaseb]

A Futures ETF is an ETF which tracks a future commodity like Crude Oil. Sure a spot ETF would be better but there are issues with that so it was either Bitcoin Future ETF or nothing. The issue with this will be contago every month when the contracts need to roll, there will be some loss in that so its not ideal for holding long term.

When you buy a futures ETF you aren't physically buying a BTC however your counterparty is as a hedge. Someone buys some shares of a BTC ETF, and that counterparty of that hedges with the Futures, and the counter party of that counter party hedges with the spot market. So its all connected one way or another.

[Victorycoin]

The ETF provides diversification by repeating a stock index that you will not get  some stocks of your choice at ETF you will have the flexibility to trade your preferences such as short selling or margin purchases. The ETF also offers a variety of alternative investments  commodities, foreign indices and the ability to invest in international securities you can also protect your position using options and futures that do not apply to mutual fund investments. There is no such ETF with bitcoin.