For the first time in what seems like a month, Natural Gas ETPs are experiencing a rally after a disastrous October in terms of plunging prices on warmer weather forecasts.
UNG (U.S. Natural Gas, Expense Ratio 0.60%), $555 million in AUM), the largest Natural Gas tracking ETP in the U.S. listed universe traded as high as $9.64 on an intraday basis back in mid-October, only to fall tumultuously to as low as $6.85 on an intraday basis just four trading sessions ago before rebounding to current levels.
Trading volume in the product has been well above average for at least the past month in the product, and even though there has been tremendous price pressure in the space as of late, year-to-date UNG has still actually attracted net new assets (over $106 million in) via creation flows. UNG has been maligned in the past due its specific fund construction in owning front month Natural Gas futures, which are subject to the negative effects of contango when present in the futures markets, but like cousin fund USO (U.S. Oil, Expense Ratio 0.45%, $2.6 billion in AUM) this has not stopped either fund from becoming and remaining the largest funds in their respective spaces in terms of assets under management.
Following UNG in the Natural Gas segment come two levered products, a Bull and Bear fund, both of which have proven rather popular during times of Natural Gas price volatility like we have seen in the past month. These funds are more specifically UGAZ (VelocityShares 3X Long Natural Gas ETN, Expense Ratio 1.65%) and DGAZ (VelocityShares 3X Inverse Natural Gas ETN, Expense Ratio 1.65%).
UNG shares rose $0.32 (+4.53%) to $7.38 in Monday afternoon trading. Year-to-date, UNG has fallen 15%.
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.
Paul 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.