Natural Gas ETF: Will Backwardization Give UNG a Boost?

Michael Johnston submits:One of the most interesting success stories in the ETF industry is that of the United States Natural Gas Fund (UNG).

Michael Johnston submits:Recent years have seen the launch of hundreds of new exchange-traded products, many of which offer increasingly granular exposure to various asset classes. The latest innovation comes in the commodity space, where Vermont-based Teucrium Trading LLC filed with the SEC for an ETF that invests in Chicago Board of Trade Corn Futures.

By Tom Lydon: Natural gas traders are finally getting a break as lower inventories and rising demand helped supported a price rally. Investors can also capture the upside in the energy commodity through a number of exchange traded fund options.

Ron Rowland submits:Teucrium Trading last week (2/1/11) launched the Teucrium Natural Gas Fund (NAGS), providing investors with unleveraged exposure to natural gas futures contracts. The fund’s stated objective is to reflect the daily percentage change in the next March, April, October, and November Henry Hub Natural Gas Futures Contracts, weighted 25% equally in each contract month, less expenses.

Irfan Chaudhry submits: Crude oil has always been an important portfolio diversifier. This historical diversification benefit increased even more in 2009 / 2010. With Federal Reserve Bank of US pumping more money into the system, the crude oil price is likely to head higher which may provide the investors return enhancement besides portfolio volatility reduction in 2011.

Michael Johnston submits:The United States Natural Gas Fund (UNG) is truly one-of-a-kind, not only as a commodity ETP but as an investment vehicle in general. Since its inception in April 2007, UNG has lost almost 90% of its value, steadily declining as natural gas prices tumbled and the nuances of a futures-based investment strategy ate into the asset base.

Michael Johnston submits:The impressive rise of the ETF industry has changed the business of investing in countless ways. Low-cost exposure to indexes has brought increased scrutiny on the concept of active managements and traditional mutual funds. Immediate exposure to entire markets and sectors has made individual stocks a thing of the past for some active investors.

Michael Johnston submits:Since its launch in April 2007. the United States Natural Gas Fund (UNG) has endured a strange existence.