Which Natural Gas ETF to Invest Into?There are a few different natural gas ETFs out there, the biggest of which UNG has performed terribly over the last couple of years. This is true even as many of the major energy stocks such as SWN, APA, XTO, and CHK continue to go up. Here is a chart of the UNG, as you can see it has done a little worse than getting cut in half this year. But why? One reason is that UNG invest into future contracts and continuously rolls over to the next contract as the last one comes due. That may work out fine sometimes, but when the longer dated future contracts become more expensive it can cause the fund to lose profits.
On the other hand FCG, which invest directly into the stock of energy companies that produce natural gas has seen a somewhat steady gain over the year. It doesn’t have to worry about future contracts becoming more expensive because it simply invest into individual companies and can afford to hold those companies over the long term. 
So, which ETF for natural gas should you buy? Well if you are bullish on natural gas this may be a great time to buy. Technically they have both broken out of resistance, normally a pretty bullish sign. But investing into FCG is probably a smarter idea then investing into UNG for two reasons. First UNG will continue to suffer from the same fatal flaw that it originally suffered from. And second investing into strength is normally a much better approach. |
