Natural Gas Tumble Weighs on Equity ETF

Futures-based natural gas exchange traded funds and exchange traded notes (ETNs) are trading modestly higher, but that is not enough to stop the bleeding caused by moderate summer temperatures throughout much of the U.S.

Natural gas futures still hove near eight-month lows as temperate weather conditions keep Americans from accelerating use of air conditioning. Slack demand has sent the United States Natural Gas Fund (NYSEArca: UNG) lower by nearly 16% over the past month while the iPath Dow Jones-UBS Natural Gas Total Return Sub-Index ETN (NYSEArca: GAZ) sat on a one-month loss of almost 18% entering Wednesday. [Natural Gas ETFs Flame Out]

Weakening natural gas prices are taking a toll on the equity-based First Trust ISE-Revere Natural Gas Index Fund (NYSEArca: FCG). FCG is off 8.8% over the past month after spending time, recently at that, as one of the better non-leveraged equity-based energy ETFs. In fact, FCG was one of April’s 10 best non-leveraged ETFs. [Commodities ETFs Cruise]

Over the past three months, FCG is lower by 3.6%, but over the same period, the Energy Select Sector SPDR (NYSEArca: XLE) is higher by 6.5%. In the past month, only four of FCG’s top-10 holdings have traded higher. The six members of that group that have fallen combine for almost 24% of the ETF’s weight.

Although FCG is up 13% year-to-date, that lags the 14.4% returned. Additionally, it took FCG a while to participate in the natural gas rally seen earlier this year. From Jan. 2 through Feb. 21, UNG surged more than 32%, but stymied by a lethargic start to the year for U.S. stocks, FCG rose just 4% over the same period. [An ETF Left Behind]