The ETF “invests in near-month futures contracts, and as each month draws to a close it has to ‘roll’ its position forward,” Morningstar writes in profile. “Effectively, the fund sells its soon-to-expire position and purchases a contract further from expiry to avoid physical delivery. When the prices of those back-month contracts exceed the price of the front-month contract (known as a state of contango’), the fund loses money each time it rolls its position.”
American households that use natural gas to heat their homes will see lower costs this year. “In a typical November, natural gas prices start rising in anticipation of higher demand, but this year a supply glut is weighing on the market. It has been 10 years since prices were this low heading into the winter,” WSJ.com reports.
U.S. Natural Gas Fund
Full disclosure: Tom Lydon’s clients own UNG.