The industry's first crude oil exchange-traded fund has taken heat recently for allegedly being inappropriate for the average investor, and now the ETF community is firing back.

Refuting recent media and analyst reports, ETFZone.com claims that, in small doses, the new United States Oil Fund (USO) from Victoria Bay Asset Management in Alameda, Calif., could actually mitigate risk in a large, stock-heavy portfolio. Sure, as a standalone asset class, oil is one of the most volatile commodities on the market. But according to modern portfolio theory, an uncorrelated asset helps lower overall portfolio risk, the San Francisco-based website argues.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.