The United States Natural Gas Fund (NYSEArca: UNG) has not been anything to write home about this year. Even with the nightly news telling America about frigid temperatures in the Midwest and Northeast on a regular basis, UNG is lower by 3.2% over the past month.
Natural gas equities are a different story. The ISE-Revere Natural Gas Index, the underlying benchmark for well-known exchange traded funds such as the First Trust ISE-Revere Natural Gas Index Fund (NYSEArca: FCG) and the Direxion Daily Natural Gas Related Bull 3X (NYSEArca: GASL), has been soaring as natural gas futures slide. [Nat Gas ETFs Diverge]
Over the past month, FCG is up 13.2%. GASL, which attempts to deliver three times daily performance of theISE-Revere Natural Gas Index, is up more than 35% over the same period. The temerity of FCG’s and GASL’s recent gains will be put to the earnings test this week when Talisman Energy (NYSE: TLM), almost 7% of the index’s weight, delivers fourth-quarter results on Thursday.
Talisman’s and other looming earnings reports for FCG and GASL come with the ETFs residing at interesting junctures. FCG, and subsequently GASL, has a penchant for over-shooting UNG’s moves in either direction. For example, UNG fell 28.6% last year, but FCG was nearly 50% worse and almost five times as bad as the Energy Select Sector SPDR (NYSEArca: XLE).
GASL dropped 5.7% Tuesday, but through Monday, the ETF was up 43% this month, making it the top performer by a wide margin among Direxion’s bullish leveraged funds. However, GASL is a reminder that only traders that can handle risk and stomach volatility should embrace leveraged ETFs. [A Warmer View of Leveraged ETFs]
Only three of Direxion’s triple-leveraged ETFs, two bullish and one bearish, have been more volatile than GASL over the past 30 days, according to issuer data. As such, GASL’s 30-day variance to triple the performance of the ISE-Revere index over that period is about 2.2%, still not nearly as bad as the 30-day variances on the Direxion Daily Junior Gold Miners Index Bull 3x Shares (NYSEArca: JNUG) and the Direxion Daily Russia Bull 3x Shares (NYSEArca: RUSL).
Volatility for FCG and GASL could rise in the coming weeks. From Feb. 18 through Feb. 24, nearly 13% of the ISE-Revere index’s weight delivers earnings reports.
Direxion Daily Natural Gas Related Bull 3X Shares
