After soaring to start 2014 and ranking as one of the best exchange traded products of any type, the United States Natural Gas Fund (NYSEArca: UNG) pulled back in late February.
However, UNG is still up more than 23% year-to-date and has gained 4.1% in the past week. Natural gas for May delivery rose 1.5% on Wednesday after the U.S. Energy Information Administration said inventories rose by 4 billion last week, well below the 14 billion-barrel increase analysts expected.
The inventories data bolster hopes that following a harsh winter that sent gas prices soaring, a summer supply shortfall could lift gas as high as $5 per British thermal unit. [Nat Gas ETFs Could See a Summer Surge]
That would, of course, be good news, but it could also benefit the equity-based First Trust ISE-Revere Natural Gas Index Fund (NYSEArca: FCG). FCG has shown a tendency to lag UNG when natural gas prices shoot up, but that trend has recently reversed. Since the start of March, UNG is up 3.7%, but FCG has soared 6.7%. [Nat Gas Equity ETF Tries to Catchup to Commodity]
Over the past month, FCG is a top-five non-leveraged fund and the best energy sector ETF, proving it has some tailwinds from investors, lured by compelling valuations, rushing into the sector. Energy ETFs were among the leading sector funds in terms of first-quarter inflows. [Buyers Lured to Energy ETFs]
FCG had $458.4 million in assets under management on Feb. 6, but that number was up to $473.5 million as of April 9.
FCG will turn seven in May, so the fund has been around various treatments of natural gas. It surged alongside with natural gas futures in 2007 to the commodity’s peak in the second quarter of 2008. FCG would then proceed to plunge alongside gas.
As an equity-based ETF, FCG is vulnerable to the whims of the broader market, or at least it would appear to be, but not only has the ETF topped UNG since the start of March, but it has also trounced the S&P 500.
The ETF is home to 30 stocks with a median market value of $4.9 billion and overall price-to-sales ratio of 1.9. Top-10 holdings include Stone Energy (NYSE: SGY), Anadarko Petroleum (NYSE: APC) and Ultra Petroleum (NYSE: UPL).
First Trust ISE-Revere Natural Gas Index Fund
ETF Trends editorial team contributed to this post.