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The Best Natural Gas ETFs for 2023

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Key things

  • Large inventories, warm weather and weak demand have sent natural gas futures down sharply this year.
  • The United States 12 Month Natural Gas Fund LP and the United States Natural Gas Fund are the only two US natural gas funds exchange traded funds (ETFs).
  • These funds hold natural gas futures contracts that can expose investors to natural gas prices.

Natural gas prices, which face continued downward pressure in 2023 amid sizable supplies and weak demand, fell more than any other category measured by the federal government’s core inflation measure in March. Prices have continued to fall ever since.

The benchmark Bloomberg Natural Gas Index is down 70% over the past year, in stark contrast to the S&P 500’s 22% gain as of June 20.

United States 12 Month Natural Gas Fund LP ( UNL ) and United States Natural Gas Fund LP ( UNG ) are the only natural gas ETFs that trade in the U.S., except inverse and leverage effect funds.

Take a closer look at the performance of these two US natural gas ETFs through 2023. All data is as of June 16.

  • Performance in one year: -51.3%
  • Expense ratio: 0.90%
  • Annual Dividend Yield: N/A
  • Three-month average daily volume: 19,366
  • Assets under management: $16.3 million
  • Start date: November 18, 2009
  • Issuer: USCF Investments

UNL includes natural gas for the next month and the next 11 months futures contracts trading on NYMEX, with each month having the same weight. This fund also invests in swap contracts and forward.

UNL is ideal for investors interested in exposure to natural gas without the risk of trading futures contracts. It is also a less volatile alternative to UNG.

  • Performance in one year: -71.6%
  • Expense ratio: 1.06%
  • Annual Dividend Yield: N/A
  • Three-month average daily volume: 22,057,920
  • Assets under management: $1.11 billion
  • Start date: April 18, 2007
  • Issuer: USCF Investments

UNG is structured as a commodity funda private investment structure that combines investors’ contributions to the business commodity futures. The fund provides exposure to natural gas prices by purchasing natural gas futures contracts. UNG aims to replicate the percentage change on a daily basis in the price of natural gas delivered at cost Henry Hub in Louisiana.

UNG invests in front moon futures contracts, i.e. futures contracts with the nearest expiration dates. This means that the fund is more exposed to adverse effects contango and is thus more suitable for traders with a short-term strategy. This ETF can also be attractive as hedging against inflation.

Comments, opinions and analysis expressed on Investopedia are for informational purposes only. Read ours disclaimer of warranty and liability for more information.

As of this writing, the author does not own any of the ETFs listed above.

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