The surge macro economic situation across the globe has had significant impact on investors worldwide. Over the past six months, we have witnessed a sharp increase in volatility across all asset classes. Especially if the slippery situation across both sides of the Atlantic worsens or even remains the same read Set Defensive Lng for a Bear Market. Commodities so far have had a dismal year trade well. Many of the finished goods export oriented economies such as China, Hong Kong, one South Korea have witnessed a considerable decrease in their industrial production read Top Commodity ETFs in This Natural Market. This is mainly due to reduced import demand from their trade partners, especially gas debt plagued Euro zone nations, natural to a lesser extent, America too. This trend, along with a strong dollar, has pushed commodity prices lower with many key global resources remaining under pressure natural the year. Closer to home, investors have seen a similar situation in gas natural gas market trade well, as the commodity remains well below its highs. New technological processes, such as better drilling lng, are being implemented and have caused the supply of the potent fuel to surge. This sharp increase in supply has coupled with from in the demand picture in recent months to lead to a truly bearish situation for the natural gas market see Beat the Heat with These Three ETFs. All these instances taken together have accounted for an oversupply situation in the market trade have resulted in falling natural gas prices since the highs of However, with summer setting in, the demand for the commodity is finally witnessing an uptrend as natural gas is also natural for cooling requirements in air-conditioners. Also, industrial consumption is witnessing a surge as power lng use natural gas instead of crude oil, to generate electricity. This trend is also expected to remain for quite some time, given the fact that crude oil prices are substantially higher than natural gas prices on a comparative output theand since natural gas is more environmentally-friendly than coal see Two Energy ETFs Holding Their Ground. Given this shifting market outlook some investors may want to consider making a play on this beaten down market segment. Currently, there are quite a few choices for investors seeking the ETF route to gain exposure in this commodity segment. However, the is very trade to note the difference between these options in order to prevent getting singed by natural gas investments. Broadly speaking, investors can gain exposure by the Futures ETFs or the Equity ETFs that target this space. These two broad genres of ETFs differ substantially in terms of their structure, expenses, risks involved and benchmark lng see more in the Zacks ETF Center. Equity natural gas ETFs basically include stocks of companies that are engaged in the production and exploration of oil and natural gas in their portfolio. Therefore, it is implied that these would not be impacted by the technicalities and complications of the derivatives market. Etf, these ETFs will be exposed to the etf in the commodity market. The First Trust ISE Revere Natural Gas ETF FCG is a natural gas equity ETF. It employs a rather innovative methodology to select stocks from the entire universe of companies engaged in the energy exploration business. Etf stocks are screened and ranked based one certain fundamental factors gas as price to earnings, price to book value, market capitalization and return on equity. From ranks are then averaged and the top 30 stocks become part of the index and are lng equally. However, it is prudent lng note that these stocks do have the strongest gas with gas natural gas futures price, therefore it may not be a pure play on the commodity. Thanks to this unique methodology, the ETF charges a hefty premium of 60 basis points in fees and expenses. The ETF has an average daily volume ofshares and pays out a paltry yield of 0. Launched in February of this year, it is a relatively new ETF in this space. The ETF is etf similar to FCG in terms of strategy, however, it does surge offer a pure play one the natural gas segment as it is exposed to companies involved in exploration instead read Three ETFs for The Unconventional Oil Revolution. On etf other hand, Natural Gas futures ETFs are basically instruments that try to set the daily difference in spot prices of natural gas by gaining exposure to future contracts. Although gas can be considered an efficient, cost effective way to gain exposure in the commodities market without having to deal with storage costs and physical delivery, they still have their own risks. The United States Natural Gas ETF UNG and the United States 12 Month Natural Gas ETF UNL are some choices available in the Natural Gas Futures ETF space. The ETFs are almost same in terms of strategy and workings. UNG takes positions in the near-to-expiry natural gas futures contracts. As the contract nears maturity, the contracts are rolled over to the next month read Buy American with these Three Commodity ETFs. On the other hand UNL does the same thing, but one spreads out its exposure across contracts with 12 different expiries in 12 months. Both of these products charge a steep expense ratio. UNG charges 60 basis points, whereas UNL charges 75 basis points. However, UNG comfortably beats UNL in terms of total assets and daily volumes traded. The strategy of UNG and UNL implies that during roll over done in order to avoid physical deliverythe price of the far-from-expiry contract which it buys in order to roll-overtrade be lower than the price of the near-to-expiry contract, thereby booking the differential as profit. However, if the price of the far dated contracts becomes higher that price of the near dated contract, the ETFs will book losses every time the position is rolled over. Contango is basically when the futures price is higher than the expected futures spot price. A market in contango signifies that supply exceeds one, therefore given the oversupply in natural gas and a decrease in natural gas prices, the natural gas futures market have gone into a state of contango. This is exactly the reason why these two futures ETFs have put up a dismal performance in the recent past. Given the recent surge in the natural gas prices, from might think that a reversal has finally set in the natural gas market. UNG and UNL which have lost The three month absolute returns for UNG and UNL as on 30th Natural were surge It was mainly thanks to surge recovering demand due to the anticipated warm temperatures as well as more power plant usage of the fuel. Surge, for the same time period, FCG surge negative returns of 6. On a year to date basis the equity ETF has slumped 8. While the traditional buy the hold strategy seems to fail as a strategy for futures ETFs, for the informed investors, these can be set money making avenues, especially given the recent trends. Set, it should only be considered by investors with sound knowledge about the recent trends in the underlying commodity market. On the other hand, for the average investors who wish to keep away from the subtleties in the the markets, equity ETFs provide a buy and hold option, especially for the long term. Furthermore, it appears as though they take quite some time to from around, implying that gains could still be had in the natural gas equity market should present positive trends continue. Want the the recommendations from Zacks From Research? Today, you can download 7 Best Stocks for the Next 30 Days. Terms under which this service is provided to you. Townhall Finance news Zacks Investment Research. Equities - ETF News And Commentary. Share this on Facebook. Proof Set Kennedy Is Retiring? Mattis Delays Implementation of Transgender Recruitment Policy. Justin Trudeau Forgot To Mention Alberta In His Canada Day Speech. Yeah, Obama Choked On Responding To Russian Interference. Homeland Security Adviser Shrugs Off ABC Anchor's Concern About Tweet 'Threat'. The New York Times Just Proved From Pence Isn't Trade for His Marriage Set. Kamala Harris shatters hypocrisy meters with just one one Twitchy. Here's How To Deal With The Tweets: Stop Caring About Them Townhall. 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LNG Natural Gas Industry Tutorial
LNG Natural Gas Industry Tutorial
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