One of the most volatile segments of the market in the past week or so is in the Natural Gas space, where we see the largest Natural Gas tracking ETP, UNG (U.S. Natural Gas Fund, Expense Ratio 0.60%, $532 million in AUM) falling like a rock to current levels.
The product is trading at approximately $7.82 today, and fell below its 200 day MA for the first time since last November. UNG traded above $9.60 just eight trading sessions ago, presumably on colder weather forecasts for parts of the U.S. such as the Northeast, but it has quickly cratered to current levels on headlines of higher Natural Gas supply in the new-year and on potential softer EPA policy under a new U.S. Presidential administration.
As we mentioned in our ETF Fund Flows recap, we have seen some profit-taking in Bearish linked DGAZ (VelocityShares 3X Inverse Natural Gas ETN, Expense Ratio 1.65%, $255 million in AUM) into this recent sudden sell-off in Natural Gas prices. The Natural Gas ETPs in terms of assets under management are not huge, and considering the trading volatility in the space especially lately, we would expect more interest from portfolio managers as well as short-term directional traders alike here.
UNG is the largest fund in the space with its $532 million in AUM, followed by a sister fund to DGAZ, UGAZ (VelocityShares 3X Inverse Natural Gas ETN, Expense Ratio 1.65%, $320 million in AUM). Following DGAZ, which is the third largest fund in this space, there is a rather steep drop-off in terms of fund asset sizes with BOIL (ProShares Ultra Bloomberg Natural Gas, Expense Ratio 0.95%, $43 million in AUM) coming in next.
The United States Natural Gas Fund, LP (NYSE:UNG) was trading at $7.79 per share on Monday morning, down $0.38 (-4.65%). Year-to-date, UNG has declined -16.60%, versus a 1.47% rise in the benchmark S&P 500 index during the same period.
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.
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.