Earlier this year, the iPath Series B Bloomberg Natural Gas Subindex Total Return ETN (NYSEArca: GAZB) debuted as an alternative to the iPath Bloomberg Natural Gas Subindex Total Return ETN (NYSEArca: GAZ).
GAZB will try to reflect the performance of the same index as GAZ, Bloomberg Natural Gas Subindex Total Return Index, which tracks the potential returns through an unleveraged investment in natural gas futures contracts.
ETNs are debt securities issued by financial institutions that promise to pay the return of an index, minus fees and taxes. Therefore, investors are exposed to the credit risk or the possibility the underwriting bank goes bankrupt. The note can be vulnerable if the issuer gets into financial trouble, otherwise known as a default. With an ETN, an investor can lose some or all of their investment if the ETN issuer goes under.
“Higher prices in natural gas, expected to rise from the March level of $2.88 to an average of $3.10 in 2017, with a further increase to $3.45 in 2018, will likely contribute to a decline in the share of electricity supplied by natural gas in the coming years, as gas loses its competitive edge. Surprisingly, the EIA predicts that natural gas’ share will fall from 34 percent to 32 percent by 2018, while that of coal will increase from 30 percent to 31 percent,” according to ETF Daily News.
For more information on the natgas market, visit our natural gas category.