Invest in Natural Gas With ETFs
Natural gas ETFs are funds that track the price of…natural gas. Simple in theory, but not in execution.
There are two types of energy ETFs that correlate to the price of natural gas. Some are commodity ETFs that track the price of a natural gas (or related index) by utilizing derivatives such as futures in their construction. And while these types of energy funds have been under scrutiny, they can't be ignored.
UNG, the United States Natural Gas ETF is a prime example of an energy ETF that aims to track the price of natural gas, but where the accuracy of the fund’s ability to emulate the price of the commodity has been controversial in the past. So much so that regulations have been passed regarding commodity futures and their availability.
A slightly less direct way to give your portfolio exposure to natural gas is to invest in an industry ETF that tracks companies involved in the exploration and production of natural gas. A perfect example of this type of fund is the Jefferies TR/J CRB Wildcatters Exploration & Production Equity ETF (WCAT).
Some of the holdings in WCAT are Brigham Exploration Company (BXEP) and Sandridge Energy Inc. (SD). Companies with profits tied to natural gas.
So whether you want to invest in a fund that is tied to the natural gas as a commodity or the natural gas industry instead, there are a decent amount of funds to select.
And to help you with your research, they're listed here so you can see which fund is the best fit for your investment strategy.
Natural Gas ETFs and ETNs
- BOIL - ProShares Ultra DJ UBS Natural Gas ETF
- KOLD - Ultra Short DJ-UBS Natural Gas ETF
- DCNG - iPath Seasonal Natural Gas ETN
- DDG - The Short Oil and Gas ProShares ETF
- DRIP - Direxion Daily S & P Oil & Gas Exploration and Production Bear 3X Shares ETF
- GUSH - Direxion Daily S & P Oil & Gas Exploration and Production Bull 3X Shares ETF
- FCG – First Trust ISE-Revere Natural Gas ETF
- FRAK - Market Vectors Unconventional Oil & Gas ETF
- FTXN - First Trust Nasdaq Oil & Gas ETF
- GASL - Direxion Daily Natural Gas Related Bull 3X Shares ETF
- GASX - Direxion Daily Natural Gas Related Bear 3X Shares ETF
- GASZ - ETRACS Natural Gas Futures Contango ETN
- GAZ – iPath DJ AIG Natural Gas TR Sub-Index ETN
- IGAS - Global Natural Gas Small Cap Equity ETF
- MLPG - UBS E-TRACS Alerian Natural Gas MLP Index ETN
- UNG – United States Natural Gas ETF
- SOP - ProShares Ultra Short Oil & Gas Exploration & Production ETF
- UOP - ProShares Ultra Oil & Gas Exploration & Production ETF
- HYXE - iShares iBoxx $ High Yield ex Oil & Gas Corporate Bond ETF
These are the current natural gas ETF that are available to trade on today's exchanges. However over time as new funds are introduced or if any stop trading, I will be back to update this list. So you may want to check in now and again if the natural gas sector is part of your investing strategy. There may be new opportunities.
And while these funds may seem attractive, they are not without risk.
So as you go through this list, be sure to investigate each fund closely. Watch how they interact with market conditions, look at their quote history and even take a look under the hood and see what is in the fund. Many leveraged and inverse fund contain derivatives such as options and futures to achieve their goals, so it's important to understand how they work. Know your risk and be sure to ask for professional guidance if need.
But once you do enter the natural gas industry through ETFs, then I wish you the best of luck.