United States Natural Gas Fund (UNG)
What Is the United States Natural Gas Fund (UNG)?
The United States Natural Gas Fund (UNG) is a exchange traded fund (ETF) with the stated goal of following the movement of natural gas prices. It is the biggest natural gas ETF with shares available on the NYSE Arca. The fund gives access to investing in natural gas without putting resources into the futures market, which is a convoluted and risky route for the standard investor.
Understanding the United States Natural Gas Fund (UNG)
Before ETFs became far reaching, investors needed to invest in futures to gain exposure to natural gas, which is substantially more confounded than buying or selling stock on an exchange. With the approach of ETFs, investors became able to handily invest in natural gas without the risk of purchasing or sell futures. It is having commodity-like exposure without straightforwardly investing in the commodity.
UNG is the biggest natural gas ETF with a futures base. Its investment goal goes for the gold percentage changes of its net asset value (NAV) to mirror the daily percentage changes of the price of natural gas delivered to Henry Hub, Louisiana. This is estimated with the Henry Hub/natural gas futures contract on the NYMEX. Henry Hub is the biggest gas hub in terms of trading volumes and the benchmark for U.S. gas futures.
Falling Prices
Henry Hub gas prices have been falling with the U.S. shale boom, which has been reflected in the performance of UNG. The U.S. Energy Information Administration (EIA) accepts that prices will increase in the second quarter of 2020 as gas production will dial back and demand for gas will increase for power generation needs.
UNG invests principally in natural gas futures contracts yet in addition in natural gas-related futures as well as advances and swaps. The investments are "collateralized with cash, cash equivalents, and [US government obligations](/governmentally ensured commitment) with outstanding maturities of two years or less."
The United States Natural Gas Fund (UNG) was presented in April 2007 by Victoria Bay Asset Management (presently known as United States Commodity Funds, LLC) and the American Stock Exchange. It is managed by United States Commodity Funds.
Snapshot of the United States Natural Gas Fund (UNG)
As of Feb. 12, 2020, UNG has the accompanying profile:
- Net assets: $530.8 million
- Normal volume: 4,667,496
- Cost ratio: 1.28%
- One year performance: - 40%
- Past close: 14.03
- Top holdings: Futures contract on Natural Gas Futures Jan 20 (48.5%); United States Treasury Bills (1.5%)
Features
- The United States Natural Gas Fund (UNG) is a natural gas ETF whose goal is to follow the percentage movements of the natural gas futures contract on the NYMEX.
- The ETF is listed on the NYSE Arca and invests in natural gas futures, swaps, and advances. It is the biggest natural gas ETF.
- The NYMEX natural gas contract is the Henry Hub Natural Gas futures, the primary U.S. benchmark for natural gas.
- The performance of the ETF has been poor, given the reliable drop in prices of Henry Hub, as the U.S. shale industry develops and adversely influences Henry Hub prices.
