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Here’s How to Play the Volatile Natural Gas Markets

Wednesday, October 26, 2016 10:17
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(Before It's News)

Natural gasWith much of the northeastern U.S. waking up to freezing temperatures this morning, it’s prudent to investigate the movements of the short term Natural Gas market.

Those in the Midwestern states, along with other areas of the country, have actually been enjoying very warm weather for this time of year. Hence, recent headlines of natural gas futures sliding the most in months making the rounds (see: Here’s How Weather Increasingly Affects Natural Gas Prices).

While not the best tracker of Natural Gas prices, thanks to the negative effects of contango in the futures markets, the United States Natural Gas Fund, LP (NYSE:UNG) is still the largest fund in the space in terms of asset size, with $567 million in AUM presently (and expense ratio of 0.60%), although assets in UNG are well off their peak historical high the product has seen at times since its 2007 inception.

UNG-2016-10-26

Interestingly, the second largest fund in the space is a levered “Bull” fund known as UGAZ (VelocityShares 3X Long Natural Gas ETN, Expense Ratio 1.65%, $225 million in AUM), which has been under incredible price pressure this week on heavy trading volume thanks to the sharp sell-off in Natural Gas futures prices. This morning UGAZ is trading on its 200 day MA, a level that it has successfully stayed above since mid-September. Year-to-date UNG has seen mild outflows, with about $28 million leaving the fund via redemptions, while UGAZ has seen larger outflows to the tune of $95 million out.

UGAZ’s sister ETF, the Levered Bear DGAZ (VelocityShares 3X Inverse Natural Gas ETN, Expense Ratio 1.65%), has $136 million in assets under management. ProShares’ “Levered Bull” BOIL (Ultra Bloomberg Natural Gas ETF, Expense Ratio 0.95%, $37 million in AUM) is the next in line in this space in terms of fund size, while the next largest “non-levered” product is the under-recognized and likely under-utilized UNL (United States 12 Month Natural Gas Fund, Expense Ratio 0.75%, $15.3 million in AUM).

So whether you’re bullish or bearish on natural gas, which is becoming a bigger and bigger part of the energy landscape, there’s an ETF out there for you.


Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Paul Weisbruch
paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.

Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.

You are viewing an abbreviated republication of ETF Daily News content. You can find full ETF Daily News articles on (www.etfdailynews.com)

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