Want to trade the Natural Gas ETF? Here are some to consider.
There are many things that affect the ebb and flow of natural gas prices. Supply and demand is certainly one of them. Will this winter be cold and cause a spike in prices? Do electric companies needing natural gas to generate the power for air conditioners project the coming summer to be hot, thereby cause a huge demand? What about hurricane season? A hurricane can destroy rigs and disrupt production, witness the effect hurricane Katrina had of natural gas prices several years ago.
Here is a list and some background on some of the most popular Natural Gas ETF that are available for you to trade.
- The United States Natural Gas Fund, LP (UNG)
The United States Natural Gas Fund is an exchange traded fund that seeks to track (percentage wise) the price movements of natural gas prices. UNG units are bought and sold on the New York Stock Exchange.
The investment objective of UNG is for changes in the percentage terms of the units net asset value (nav) based on the natural gas prices as trade on the New York Mercantile Exchange. The price is based on the near month contract that’s set to expire, except when the near month contract is within 2 weeks of the expiration of the contract. At that point the natural gas futures contract will be “rolled” over into the next contract month.
- First Trust ISE-Revere Natural Gas Index Fund (FCG)
The investment objective for First Trust ISE-Revere Natural Gas Index Fund (FCG) is to seek returns that correspond to the price and yield (before expenses) of the equity called the ISE- Revere Natural Gas Index ™.
The ISE- Revere Natural Gas Index ™. Is an equal-weighted index made up of exchange-listed companies that derive a substantial portion of the income form the exploration and production of natural gas. The index is constructed based on the total population of stocks listed in the United States of companies involved in the production and exploration of natural gas. Stocks of companies whose natural gas reserves do not meet certain requirements are not included in the index. Stocks are then ranked using four different methods. These methods include Price/Earning ratio, Price/Book ratio, Return on Equity and to correlation to natural gas futures prices. The rankings are then averaged and the top 30 stocks based on final rank are then selected for the index. The index is then rebalanced on a quarterly basis.
- SPDR S&P Oil & Gas Exploration & Production ETF (XOP)
The SPDR S&P Oil & Gas Exploration & Production ETF seeks to reproduce as closely as possible the performance of the S&P Oil & Gas Exploration & Production Select Industry Index. This index represents the oil and gas exploration and production sub-industry portion of the S&P Total Market Index. The S&P Total Market Index tracks all the United States common stocks listed on the NYSE, AMEX, NASDAQ National Market and the NASDAQ Small Cap exchanges. The Index is an equal-weighted market cap index. The Fund attempts to approximate the investment performance of the index, by investing in a portfolio of stocks intended to replicate the index.
These are 3 of the most popular Natural Gas ETF to trade. Here are a few more you should research:
IShares Dow Jones US Oil & Gas Exploration ETF (IEO)
SPDR S&P Oil & Gas Equipment & Services ETF (XES)
PowerShares Dynamic Oil & Gas Services Portfolio (PXJ)
ProShares UltraShort Oil & Gas (DUG
ProShares Ultra Oil & Gas (DIG)
Your research has now started. Go find the right investment for you.
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