ETF Trends
ETF Trends

Yesterday we profiled exchange traded funds that invest in natural gas futures, and this presents the opportunity to also highlight those ETFs that are exposed to natural gas related equities. [ETF Chart of the Day: Natural Gas]

Historically, equities that are involved in the production, exploration, or marketing/servicing of natural gas have displayed a high level of correlation with the prices of natural gas itself, and investing in such funds can be a way for investment managers to monetize their views on natural gas price movements themselves.

FCG (First Trust ISE-Revere Natural Gas Index) is the benchmark fund in the category, having attracted nearly $400 million in assets since debuting in 2007. The fund is equal-weighted and owns equities that are involved in the exploration and production of natural gas.

Currently, top holdings of FCG are XOM, STR, COP, STO and RDS.A.

A number of ETFs exist focusing on both oil and gas explorers and producers, but FCG remains the only “pure-play” in the landscape as far as devoting exposure to those equities that derive a significant portion of revenues from natural gas.

For instance, XOP (SPDR S&P Oil & Gas Exploration & Production), IEO (iShares DJ U.S. Oil & Gas Exploration & Production), PXE (PowerShares Dynamic Energy Exploration & Production) and WCAT (Jefferies TR/J CRB Wildcatters Exploration & Production Equity) are several examples that grant exposure to equities that are involved in both the natural gas as well as the oil spaces.

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