The Natural Gas ETF-UNG Has Hurt The Wallets Of Many Investors

empty-wallet“The United States Natural Gas ETF (UNG) may have resolved regulatory concerns, but the futures-based fund continues to come under pressure from an abundance of supply that is expected to suppress future prices. The current supply issues will keep gas prices depressed until 2015 despite a possibile economic recovery that could spur an increase in demand in the near future, according to a new report from the International Energy Agency’s World Energy Outlook. Representatives said the oversupply would likely stem from this country’s decreased demand for imported gas,” Don Dion Reports From The Street.

“The report is just the latest challenge for UNG, which has come under fire in recent months. UNG managers were forced to halt the share-creation process in July of 2009 after the remaining pre-approved shares had been issued. Further concerns about regulatory changes from the Commodities Futures Trading Commission delayed the resumption of normal trading,” Dion Reports.

“In June, I encouraged investors to avoid UNG and use the First Trust ISE-Revere Natural Gas Index Fun (FCG) for exposure to natural gas. FCG tracks a portfolio of natural gas producers, and is up nearly 42% year to date. While the fate of these companies is certainly tied to natural gas prices, I believe that this fund could continue to perform in the short term,” Dion Reports.

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Here’s a look at the two Natural Gas ETF’s below:

The investment (UNG) seeks to replicate the performance, net of expenses, of natural gas. The trust will invest in futures contracts on natural gas traded on the NYMEX that is the near month contract to expire. It is nondiversified.

TOP 10 HOLDINGS ( 81.02% OF TOTAL ASSETS)  
 
Company Symbol % Assets
F/C Natural Gas Futr Nov09 N/A 19.1
F/C Natural Gas Futr Nov09 Ice N/A 16.8
F/C Natural Gas Swap Nov09 N/A 8.64
Fidelity Instl MM Fds Government I N/A 12.08
Goldman Sachs FS Government Sel N/A 11.38
Morgan Stanley Inst Liquidity Gov Inst N/A 2.07
Tr Swap Ng Commodity Index Long N/A 3.13
Usng Comm Swap 2/26/10 Long N/A 7.82

The investment (FCG) seeks to replicate, net of expenses, the ISE-REVERE Natural Gas index. The fund invests at least 90% of assets in common stocks that comprise the index. The index is an equal-weighted index that consists of exchange-listed companies that derive a substantial portion of their revenue from the exploration and production of natural gas. The fund is nondiversified.

TOP 10 HOLDINGS ( 36.73% OF TOTAL ASSETS)  
 
Company Symbol % Assets
ADVANTAGE OIL & GAS (AAV) 3.62
CHESAPEAKE ENERGY CP (CHK) 3.5
CIMAREX ENERGY CO (XEC) 3.49
EOG RESOURCES INC (EOG) 3.54
EXCO RESOURCES INC (XCO) 3.64
FOREST OIL CP (NEW) (FST) 3.6
GMX Resources, Inc. (GMXR) 3.82
PETROQUEST ENERGY (PQ) 4.19
PIONEER NATURAL RES (PXD) 3.53
QUICKSILVER RES INC (KWK) 3.8

Chart for First Trust ISE-Revere Natural Gas (FCG)

 

 

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