The Key Differences Between Natural Gas ETFs

Zacks

Despite a broad move lower in commodities for much of 2013, investors have seen strong trading in one corner of the natural resource world, natural gas. This potent fuel has managed to break the trend in the commodity world and actually see a strong performance in the year-to-date period.

This is pretty surprising for a couple reasons, the biggest of which is that natural gas has had a horrendous stretch over the past few years, thanks to massive supplies of the product, and the prospect for ever increasing stocks thanks to fracking technologies (read The Comprehensive Guide to Natural Gas ETFs).

However, usage of the fuel has begun to surge this year, as power plants shift to the fuel and demand remains heavy thanks to rough weather across much of the Midwest and Northeast. Plus, some suppliers of the fuel are having trouble making profits at current levels, suggesting that supplies could be curtailed in the months ahead as well.

This situation, along with a favorable futures curve, has pushed many investors to take another look at natural gas ETFs. Unfortunately, there are a handful of products out there that target the space, leaving some paralyzed by choice (read Natural Gas ETFs: Futures vs. Equities).

Below, we highlight some of the biggest differences between these funds, and in our short video, discuss what investors need to know about purchasing an ETF in this intriguing corner of the commodity world:

Name

ETF Ticker

Focus

United States Natural Gas Fund

UNG

Front month futures focus.

United States 12 Month Natural Gas Fund

UNL

Futures spread out across a 12 month time frame.

Teucrium Natural Gas ETF

NAGS

Utilizes 4 different contracts to obtain exposure across the curve.

iPath Dow Jones UBS Natural Gas ETN

GAZ

ETN format, had had premium/discount issues.

iPath Seasonal Natural Gas ETN

DCNG

Only uses one futures contract, end of year variety.

First Trust ISE Revere Natural Gas ETF

FCG

Equity focus, no futures contract worries.

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