Natural gas is one of the more volatile commodities, allowing investors to bring home serious gains, but also serious losses. It has become a trading favorite thanks to its violent price swings and its paradoxical habit of being consistently inconsistent. With weekly supply reports from the EIA as well as constant investor speculation over future energy uses, it is no surprise to see this asset class surge in such high popularity for the brave investor. But with natural gas futures being a bit too complex and dangerous for the average joe, many have turned to the United States Natural Gas Fund LP (UNG) for their exposure to this coveted trading asset [for more natural gas news and analysis subscribe to our free newsletter].
Trading natural gas has long been the dominant way of obtaining exposure to this fossil fuel. While it is possible to establish positions using stocks and ETFs, the most direct and often most liquid options come from futures contracts (or futures-based products). High daily volumes coupled with erratic and sometimes unpredictable movements have given natural gas a big name in the commodity world. While some have gotten burned by NG’s massive slide in recent years, others have been able to profit through puts and other trading strategies. Below, we outline strategies for trading natural gas, the ultra-popular United States Natural Gas Fund (UNG), and more [for more natural gas news subscribe to our free newsletter].
Commodities are potentially very powerful investments, but they also come with their fair share of risks. In recent years, investors and advisors have begun to adopt commodities into portfolios, as many have seen the benefits of adding these low-correlated assets to a group of holdings. The launch of a robust lineup of exchange-traded products that utilize both physical commodities and commodity futures contracts has brought commodities to the masses; they’re no longer reserved for the largest and most sophisticated investors.
This year saw a surge in popularity for commodity investing. As the years have passed, investors have seen the benefits of investing in the risky, but lucrative asset class. Commodities provide a protection against inflation as well as a low correlation to equities. One of the biggest problems within the industry was the lack of options available to investors just a few years ago. It used to be that only those with a complex futures account were able to add these securities to their portfolios. Now, there are hundreds of products to help even the smallest investor gain access to their favorite commodity investment. Below, we outline all of the commodity exchange traded products that hit the market this year [see also 12 High-Yielding Commodities For 2012].
Natural gas is one of the more volatile commodities which allows for investors to bring home serious gains, but also serious losses. It has become a trading favorite thanks to its violent price swings and its paradoxical habit of being consistently inconsistent. With weekly supply reports from the EIA as well as constant investor speculation over future energy uses, it is no surprise to see this asset class surge in such high popularity. But with natural gas futures being a bit too complex and dangerous for the average investor, many have turned to the United States Natural Gas Fund LP (UNG) for their exposure to this coveted trading asset [see also Commodity Trading Trends: Crude Oil In Focus].
This article originally appeared on ETFdb.com. Futures-based investing has long been a popular option for those looking to gain exposure to commodities that were otherwise difficult to reach. But with the introduction of ETFs came increased granularity in this investing segment, as there are now exchange traded products that offer exposure to a wide variety of commodities through a single ticker. This alleviates the stress and complexities that are involved with managing a futures account, while allowing investors to sometimes gain access to multiple commodity futures with just one fund. Still, for everything that ETFs have opened up for the everyday investor, these funds are by no means perfect.
This article originally appeared on ETFdb.com. Commodity ETPs can be extremely powerful tools for tapping into an asset class capable of providing both return enhancement and diversification benefits. With dozens of products available–there are more than 120 U.S.-listed commodity ETFs according to the ETF screener–picking the right fund for your investment objectives and risk tolerances can be challenging. Beyond the type of commodity included, there can be several attributes of commodity ETPs that shape the risk/return profile; below, we look at five factors to consider when trying to narrow down the universe and find the right commodity ETF (or ETN):
Natural gas is a gas that consists primarily of methane and is widely used as an energy source around the world. The natural resource is important for the creation of fertilizers, and is now used to power a wide variety of applications including automobiles. Supplies of natural gas are concentrated in a few regions of the world, and the fuel has historically been the source of political disputes in Eastern Europe and the Middle East as well as in the U.S. The place of natural gas in the domestic energy equation has been widely discussed in recent years, with many advocating for increased adoption as an alternative to crude oil products [see also The Guide To The Biggest Companies In Every Major Commodity Sector].