The Natural Gas ETF Is Trading At A Premium (UNG)
The Natural Gas ETF (UNG) is trading at a premium because of it’s pending regulatory approval to expand the number of shares it can issue to 1.2 billion. See our earlier story: Natural Gas ETF-UNG Runs Out Of Shares ”The Exchange-traded funds are supposed to trade close to fair value, but a natural-gas ETF is acting more like a closed-end fund while it is unable to issue any more shares. The ETF is trading at a premium, which isn’t supposed to happen in normally-functioning ETFs,” John Spence from Marketwatch reports.
“U.S. Natural Gas Fund (UNG), which has seen its assets rapidly swell to more than $4 billion, last week said it was halting the creation of new shares. The fund is waiting for regulatory approval to increase the number of shares. UNG and other natural-resources ETFs have attracted unwelcome attention recently amid renewed cries that commodity index funds are fostering speculation and contributing to volatility in energy prices,” Spence reports.
“UNG was trading at roughly a 2% premium late last week after the ETF stopped issuing additional shares, as demand outstripped supply. The price of a share could continue to deviate from net asset value (NAV),” Spence reports.
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