ETF Trends
ETF Trends

Last week, a prominent Natural Gas based ETF took in nearly $200 million, equating to almost 18% of the assets outstanding in the fund at the time. U.S. Natural Gas Fund (NYSEArca: UNG) has seen a notable increase in trading volume as well, as the fortunes of Natural Gas the commodity have changed rapidly since its lows back in mid-April.

UNG for example has risen a staggering 43% from its April lows, as have other related long Natural Gas ETPs.

UNG is the undisputed leader in the space in terms of assets, with well north of $1 billion under management, but two alternatives exist that may indeed offer better exposure to returns of the physical commodity of Natural Gas.

U.S. 12 Month Natural Gas Fund (NYSEArca: UNL) and Teucrium Natural Gas Fund (NYSEArca: NAGS) exist as well, but currently only trade about 47,000 shares and 4,000 shares apiece respectively, so they generally evade the radars of most ETF using portfolio managers.

That aside, both funds have demonstrated encouraging live returns since inception versus the much larger UNG, and over time, we believe that institutional and retail investors will notice the live performance and assets may gradually migrate into these smaller, but seemingly more efficient funds.

UNL and NAGS were both designed to mitigate the costs of contango (that typically exists in the futures markets for Natural Gas) that have been much documented in the press, and have seriously hampered UNG over time in terms of eating away at overall returns.

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