Natural Gas ETFs allow investors to add natural gas to their investment portfolio without having to own the commodity.
There are two investment approaches in natural gas ETFs. The first comprises ETFs that track the price of natural gas through derivatives (e.g., futures contracts). The second class of ETFs involves funds that invest in companies working in the natural gas sector.
If you’re planning to invest in natural gas ETFs, this guide will help you understand the difference between various ETFs and list some of the best ETFs available in the market. Clicking on any ETF ticker symbol will direct you to a host of insightful charts related to that particular natural gas ETF.
Commodity Natural Gas ETFs
Commodity Natural Gas ETFs, unlike other physical asset ETFs, do not own natural gas resources directly.
Instead, these ETFs purchase natural gas futures contracts through various commodity exchanges.
Natural Gas Exploration & Production ETFs
Natural Gas Exploration Production ETFs invest in companies that are involved in the production and exploration of natural gas.
Keep in mind that there are very few companies that work in the production/exploration of natural gas only, so the returns of these ETFs will likely be partially influenced by other sectors (e.g., oil).
Leveraged Natural Gas ETFs
Leveraged Natural Gas ETFs aim to offer magnified daily of the underlying natural gas index.
- Leveraged ETFs: Leveraged ETFs seek to provide 2x or 3x daily returns of the underlying index.
- Inverse ETFs: Inverse ETFs or ultra-short funds provide -2x or -3x daily returns of the underlying index.
Natural Gas ETFs FAQ
What is a natural gas ETF?
A natural gas ETF is an exchange-traded fund that allows investors to invest in natural gas by holding natural gas futures contracts. Some natural gas ETFs take a slightly different approach by holding stocks of companies involved in the exploration and production of natural gas.
How can I invest in natural gas?
Investors can add natural gas to their investment portfolios by investing in natural gas ETFs, holding natural gas futures contracts, or investing in stocks of companies involved in the production and exploration of natural gas.
How is natural gas traded?
One of the most popular ways to trade natural gas is through futures contracts. Some traders also speculate the prices of natural gas with options contracts.
What is the oldest natural gas ETF?
The oldest natural gas ETF is the United States Natural Gas ETF which was launched on April 18, 2007.
What is the largest natural gas ETF?
The largest natural gas ETF is the United States Natural Gas ETF with over $310 million in assets.