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| BondsOnline.com: instant access to and extensive coverage of over 3.5 million stocks, bonds, indexes and other securities covering major and emerging markets and exchanges across the globe. |
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| Bonds Online |
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| 5/10/2013Market Performance |
| Municipal Bonds |
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S&P National Bond Index
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3.00% |
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S&P California Bond Index
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2.96% |
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S&P New York Bond Index
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3.13% |
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S&P National 0-5 Year Municipal Bond Index
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0.70% |
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| S&P/BGCantor US Treasury Bond |
400.09 |
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| Income Equities: |
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| Preferred Stocks |
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S&P U.S. Preferred Stock Index
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848.03 |
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S&P U.S. Preferred Stock Index (CAD)
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636.26 |
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S&P U.S. Preferred Stock Index (TR)
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1,701.05 |
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S&P U.S. Preferred Stock Index (TR) (CAD)
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1,276.26 |
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| REITs |
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S&P REIT Index
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174.07 |
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S&P REIT Index (TR)
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425.30 |
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| MLPs |
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S&P MLP Index
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2,469.58 |
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S&P MLP Index (TR)
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5,428.50 |
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See Data
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What's Next for Natural Gas ETF? |
TheStreet.com - Jan. 5, 2010 - By Don Dion
As cold envelops much of the U.S., what's next for United States Natural Gas(UNG Quote), an ETF that tracks natural gas spot prices through the use of futures and swaps?
Will the depths of winter drain the higher-than-expected supply? Is Total's(TOT Quote) bid for Chesapeake Energy's(CHK Quote) shale an indication of more deals to come?
While traders grapple with the latest technical and meteorological forecasts, managers of UNG have their own problems to contend with. As regulators seek to rein in "excess speculation" with futures position limits, UNG may end up frozen.
With much of the anticipated regulation yet to materialize, UNG managers were already restructuring the fund during the summer of 2009. Now, investing in swaps, rather than just futures contracts, UNG managers have made the fund more tradeable. Still, an enormous influx of funds into this single trading vehicle could push up against position limits in the future.
The departure of the Commodities Futures Trading Commission's chief economist, Jeffrey Harris, could speed proposed changes. Last year, Harris testified numerous times that he could find a connection between speculation and high energy prices. As he prepares to return to academia, CFTC Chairman Gary Gensler -- who believes that the American public should be protected from excessive speculation -- will have the chance to appoint Harris' successor.
While both UNG and United States Oil(USO Quote) looked to swaps, other ETF firms came up with other ways around the limitations. In anticipation of restrictions on futures holdings, the Powershares DB Commodity ETF(DBC Quote) restructured its portfolio to include a smaller percentage of Nymex-traded futures and a new position in Brent crude futures, which are traded in London.
The goal of the restructuring has been to keep these ETFs close to their objectives while expediting trading. When assets enter an ETF, the fund creates units of new shares. Before the changes to UNG's portfolio, this creation process involved buying natural gas contracts and issuing new shares.
In the summer of 2009, proposed position limits froze the creation process and dislodged UNG's trading price from its underlying value. After making the necessary changes, "normal trading" resumed late last year, and investors grappled with the implications of a swap-based portfolio model.
Uncertainty has plagued the futures trading markets and disrupted the normal chain of events for exchange-traded funds like UNG. Will a revamped strategy and a new CFTC head economist perpetuate or reduce the risks for UNG investors in 2010?
As ETF issuers move further away from their original tracking objectives to avoid limitations on their purchasing power, investors may not be getting what they pay for. Rather than a no-nonsense fund that tracks natural gas spot prices through futures holdings, investors now own a fund whose complexity will be outmatched only by those looking to regulate it.
Short-term supply issue or not, natural gas is a solid, long-term play to add to your portfolio. In the case of natural gas ETFs, the best way to gain exposure is through the producers. While owning a fund like First Trust's ISE-Revere Natural Gas(FCG Quote), may not be as "pure" of a play on natural gas prices, its structure avoids the complexity of futures-and-swap based peers.
When it comes to the natural gas market, FCG will keep investors in the action. Included in FCG's portfolio is Chesapeake Energy, Delta Petroleum(DPTR Quote), Brigham Exploration(BEXP Quote) and Pioneer Natural Resources(PXD Quote).
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